Confession and greenwashing: the impact of water information disclosure on firm value

Water pollution has become a serious problem in recent years, and firms are one of the main culprits for this environmental issue. Encouraging companies to improve water management behavior is necessary to protect water resources. Based on panel data of Chinese A-share listed companies in water-sensitive industries, this study used text analysis techniques to study the impact of corporate water information disclosure on pollutant emissions, strategy on firm value, and the U-shaped moderating role of local governments' environmental regulation. The results show that (1) an increase in the amount of emission information texts to confess the water status can help enhance firm value. (2) The increase in the amount of strategic information texts, both the tone of emission, and strategic information texts have negative impacts on firm value, which help enterprises greenwash. Further analyses find a U-shaped moderating effect of governments' environmental regulation on the relationships between emission information disclosure, strategic information disclosure and firm value, and varies under the different ISO14001 certification situations and life cycles. This research explains the effectiveness of corporate water information disclosure and the influence of governments' environmental regulation, which plays a vital role in promoting firms to improve their environmental behaviors, reduce water pollution, and further achieve green development.