In this paper, we use a distinct quasi-natural experiments to examine the effect of liberalization of the stock market on corporate environmental, social, and governance(ESG) disclosure quality. We find that the liberation of the opening of Shanghai(Shenzhen)-Hong Kong Stock Connect (SHSC) significantly and consistently improves ESG disclosure quality of listed companies, and this effect is most evident in environmental information disclosure. We then find that the SHSC can improve the quality of ESG disclosure of listed companies through “voting with feet” and “external supervision” effect. Furthermore, the effect is stronger in firms that are Non-SOEs and with low equity concentrations. Overall, our results suggest that the liberalization of stock market can improve the quality of companies’ ESG disclosure quality.

In this paper, we use a distinct quasi-natural experiments to examine the effect of liberalization of the stock market on corporate environmental, social, and governance(ESG) disclosure quality. We find that the liberation of the opening of Shanghai(Shenzhen)-Hong Kong Stock Connect (SHSC) significantly and consistently improves ESG disclosure quality of listed companies, and this effect is most evident in environmental information disclosure. We then find that the SHSC can improve the quality of ESG disclosure of listed companies through “voting with feet” and “external supervision” effect. Furthermore, the effect is stronger in firms that are Non-SOEs and with low equity concentrations. Overall, our results suggest that the liberalization of stock market can improve the quality of companies’ ESG disclosure quality.

Environmental information disclosure is an effective way for corporate to fulfill environmental protection responsibilities and encourage environmental self-inspection and management. In this paper, we utilize the environment fee to tax reform implemented in 2018 as a quasi-experiment, to investigate the impact of mandatory environmental regulation change on firm environmental information disclosure quality. Using data from listed companies in China between 2015-2020, we found that the mandatary environment regulation positively affects the monetary and non-monetary environmental information disclosure in heavy polluting industries. We also found that, firms with higher environmental subsidies and market value tend to disclose more information. The mechanism analysis shows that external governance and internal control mediate the effect of mandatory environmental regulation on environmental information disclosure quality. Compared to a growing literature on voluntary regulation, our findings provide evidence emphasizing the role of mandatory regulation of government incentives in environmental improvement.