Carbon emission disclosures and financial reporting quality: Does ownership structure and economic development matter?

Bilal, Duojiao Tan*, Bushra Komal*, Ernest Ezeani, Muhammad Usman, Rami Salem

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

32 Citations (Scopus)


Carbon emission disclosures have lately gained considerable attention from investors, public companies, and regulators due to their adverse impact on global warming. Our study examines the implication of the extent of carbon emission disclosures on financial reporting quality. Using a sample of the Chinese high polluting companies from 2012 to 2018, we found a negative relationship between carbon emission disclosures and discretionary accruals, indicating that companies with more carbon disclosures have better financial reporting quality. In addition, we find that state-owned Chinese companies with more carbon disclosures experienced better financial reporting quality. Furthermore, we find that companies from more developed regions that engage in carbon emission disclosure are also associated with higher financial reporting quality than companies from less developed regions. Our findings are robust using alternative methodologies. Our study has implications for companies' managers since it helps them legitimize their actions to stakeholders by providing carbon emission disclosures and higher financial reporting quality. It will assist the Chinese regulators and policymakers in encouraging high-polluting companies to voluntarily disclose more carbon-related matters for different stakeholders.

Original languageEnglish
Pages (from-to)109-119
Number of pages11
JournalEnvironmental Science and Policy
Publication statusPublished - Nov 2022


  • Carbon emission disclosures
  • Climate change
  • Financial reporting quality
  • High polluting industries
  • State-owned enterprises

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Management, Monitoring, Policy and Law


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