Green Finance and Corporate Environmental Information Disclosure: The Role of Competition

ABSTRACT We use China's Green Finance Reform Pilot Zones (GFR) as a quasi‐natural experiment to examine how market‐oriented green finance policies shape corporate environmental disclosure strategies. Departing from conventional regulatory frameworks, this study challenges the traditional regulation–response paradigm by demonstrating that market competition catalyzes institutional pressure transmission, reshaping the intensity of corporate competition and signifying environmental disclosure as a conduit for active prosocial strategies within corporates. Utilizing a difference‐in‐differences (DID) estimator with robustness checks, we uncover a causal link between GFR implementation and enhanced environmental disclosure quality. Environmental disclosure is not a strategic disclosure. This causal relationship is more evident in companies with higher financing resilience, higher operating efficiency of assets, stronger cost control capabilities, and enterprises in high‐pollution industries. Market competition is a mediating channel, amplifying institutional pressure through signaling mechanisms. These dynamics underscore the transformative potential of institutional empowerment via competition, challenging the regulation–response paradigm in environmental governance. We bridge gaps in the literature by integrating macroinstitutional design with microbehavioral responses, offering actionable insights for resource‐constrained economies navigating sustainability transitions.