The impact of environmental performance information disclosure on financing constraints

Previous studies examining the impact of information disclosure on financing constraints have generally ignored the role played by environmental performance information disclosure (EPID). In this article, we are among the first to examine the impact of EPID on financing constraints based on a sample of 104 listed companies on Shanghai stock exchange for the period 2008 to 2011. Empirical analysis shows that improving the quality of EPID can significantly reduce financing constraints faced by listed companies. Our results are robust and consistent across industries. Particularly, we find that the negative relationship between EPID and financing constraints is more significant for non-heavy polluting industries and companies with high level of financing constraints. Our results have significant policy implications.