Carbon Disclosures and Industry Environment Sensitivity on Firm Performance

This study was conducted to explore carbon disclosures and industry environment sensitivity on firm performance (FP). This study evaluates FP by examining both market- and accounting-based measures and how they relate to carbon disclosures. The carbon-disclosing sample is got from listed firms in China that reported their carbon emissions from 2010 to 2018. Results indicate that carbon-disclosing firms experience declined FP following carbon disclosure of 4.13% for return on assets and 4.22% for the Q ratio following disclosure compared to the non-disclosing firms, and there is a decreased FP for the control sample of carbon non-disclosing companies, an indication that environmental disclosures are linked with specific and costly risk disclosures which may castigate a company's environmental strategies over specified time periods as disclosures tend to result in accountability. We show why FP declined during the disclosure period despite prior research indicating that carbon-disclosing firms are characterized by increased FP. Despite the ever-increasing stringent measures and standards of environmental disclosures, environmentally sensitive industries are characterized by increased FP during the carbon disclosure period. We supplement the ever-expanding stream of research that evaluates the effects of carbon disclosures.   Received: 3 April 2023 | Revised: 6 July 2023 | Accepted: 5 August 2023   Conflicts of Interest The authors declare that they have no conflicts of interest to this work.   Data Availability Statement Data are available on request from the corresponding author upon reasonable request.   Author Contribution Statement Cyrus Isaboke: Conceptualization, Methodology, Software, Validation, Formal analysis, Investigation, Resources, Data curation, Writing - original draft, Visualization, Project administration. Yan Chen: Validation, Formal analysis, Resources, Writing - review & editing, Supervision. Amon Bagoza: Writing - review & editing, Visualization.