Climate-related corporate disclosure is increasingly important for investors and other stakeholders when assessing firms’ exposure to climate risks. This study examines whether the establishment of intermediate environmental courts affects corporate climate-related disclosure in China. Using a staggered difference-in-differences design and a sample of Chinese listed firms from 2010 to 2022, we find that the establishment of environmental courts is associated with a significant increase in the intensity of climate-related disclosure in firms’ Management Discussion and Analysis (MD&A) sections. The effect is more pronounced among firms with lower levels of analyst coverage and research-report attention. In contrast, firms with stronger internal governance confidence and a stronger environmental orientation exhibit a more pronounced increase in disclosure. Further analysis suggests that environmental court establishment is associated with improvements in internal control quality, which helps explain the observed changes in disclosure. Overall, the findings suggest that specialized environmental adjudication constitutes an important institutional driver of firms’ climate-related reporting behavior, although the magnitude of this effect varies with firms’ external monitoring conditions and internal governance characteristics.
Yang et al. (Thu,) studied this question.