How does voluntary environmental information disclosure affect corporate green financing capability? Evidence from Chinese heavy polluting industries.

Compared with traditional financing, green financing has certain advantages in promoting firms' green transformation and advancing sustainable social development, as related funds are primarily used for environmental project investments and interest rates are relatively lower. Therefore, improving corporate green financing capability is a valuable topic for research, particularly for heavy polluting firms. Corporate voluntary environmental information disclosure (EID), i.e., a new type of informal voluntary environmental regulation, may be an effective way to improve firms' green financing capabilities, as it can provide corporate environmental information to financial institutions and reduce the information gap. However, limited studies have explored the potential relationship between them. To fill this gap, our study adopts panel data of heavy polluting firms during 2008-2022 to explore whether and how voluntary EID affects corporate green financing capabilities in China. Benchmark, robustness, and endogeneity tests confirm that the more environmental information is voluntarily disclosed on different aspects, the better corporate green financing capability will be enhanced. In addition, we conduct several supplementary tests for in-depth exploration, with three notable findings. First, corporate voluntary EID has a stronger influence on green financing capability when a firm has more environmental protection investments and higher returns on such investments. Second, voluntary EID has a stronger impact on non-politically connected firms (in the eastern region) than on politically connect firms (in middle and western regions). Third, voluntary EID can improve firms' green financing capabilities, which increases research and development investments and improves green total factor productivity. Our study confirms the significance of corporate voluntary EID in improving green financing capability and further promoting sustainable social development, in addition to providing recommendations for policymakers and corporate managers on how to enhance corporate green financing capability.