Regional social trust and corporate environmental opportunistic disclosure: evidence from China

In-depth research on social trust has revealed that it plays a crucial role in economic growth. Regional Social trust has a positive and significant effect on corporate financial information. It remains unknown whether regional social trust has the same effect on the environmental opportunistic disclosure (EOD). EOD is defined as soft information disclosure that is not quantifiable and verifiable. Our study analyzes whether regional social trust negatively affects EOD. Using data from A-share listed companies in China from 2016 to 2019, we find that regional social trust negatively affects EOD. This effect is particularly pronounced in areas with strong economic development, legal systems, and corporations with weak internal controls, strict external audits, and no punishment from environmental supervision. Regional social trust negatively impacts EOD with foreign direct investment as an intervening variable. After conducting robustness checks and an endogeneity test, our findings remain consistent. These findings validate the role of regional social trust in enhancing environmental information disclosure, which contributes to the information transparency of the capital market. Overall, it is essential to continue to improve the credit system and the regulation of environmental information disclosure.