Does the green credit policy induce hypocritical environmental information disclosure? The catering behavior of Chinese listed companies

<p>Owing to the incentives and constraints imposed by the green credit policy of 2012 in China, and in an attempt to try and secure more green credit, firms may choose to hypocritically disclose, in their environmental information disclosure documents, only a portion of the truth regarding their environmental practices. Although researchers have greatly explored the environmental impacts of the green credit policy, rarely have studies probed into the policy’s effects on firms’ environmental disclosure strategies. This study explores the impact of the green credit policy on listed firms’ hypocritical strategies regarding their environmental information disclosure. This study employs a theoretical and an empirical analysis, a difference-in-differences model, and data of Chinese listed companies from 2010–2017. We find that, after green credit policy implementation in 2012, firms are prone to adopting a catering strategy involving more, and more positive, environmental information disclosures and a concomitant fulfillment of less of their environmental responsibilities. Robustness tests consistently demonstrate pronounced catering behaviors among listed firms. The heterogeneous analyses indicate that firms that are non-heavily polluting and are located in cities with high financial development are more likely to adopt catering strategies. The internal reason why firms adopt catering strategies is the financial constraint effect caused by the green credit policy, while external reasons include rare capital market responses to catering behaviors.</p>