Corporate financing constraints and environmental information disclosure hype

Corporate environmental disclosure has emerged as a pivotal factor in augmenting corporate value and securing essential resources. However, firms confronted with financing constraints may resort to environmental disclosure hype, potentially misleading investors. This study examines the relationship between corporate financing constraints and environmental disclosure hype through the theoretical lens of information manipulation and effective supervision. Utilizing a sample of China's A-share listed firms from 2012 to 2020, we employ dependency syntax analysis to categorize predictive and substantive environmental information disclosed in annual reports. We construct a measure of environmental disclosure hype by integrating substantive green technology innovation with predictive environmental information disclosure. Our empirical findings demonstrate a significant positive association between financing constraints and environmental disclosure hype. This relationship is moderated by the implementation of the Environmental Protection Tax Law, the characteristics of heavy polluting firms, and corporate carbon emission performance. Further analysis identifies two key mechanisms: management's self-interest motivations and diminished oversight from institutional investors. These findings offer substantial implications for strengthening corporate governance and improving transparency in the information environment. We develop a novel Dual Information Barrier framework that reveals how financially constrained firms strategically combine complex syntactic structures with low-quality technical disclosures to create misleading environmental narratives, advancing beyond conventional greenwashing paradigms. We establish financing constraints as a critical driver of environmental disclosure hype, demonstrating how resource scarcity induces firms to adopt this dual-barrier strategy. These findings provide important insights for regulators seeking to improve disclosure quality in emerging markets.