Does Local Governments’ Environmental Information Disclosure Promote Corporate Green Innovations?

Using the pollution information transparency index (PITI) as a measure of environmental information disclosure by the local governments in China, we find that the higher the pollution information transparency, the more likely green innovations are to occur. Channel tests show that environmental information disclosure by the local governments promotes corporate green innovations through political pressure channel and law enforcement channel. Moreover, the environmental information disclosure has long-term effects on corporate green innovations, and the relationship between environmental information disclosure and corporate green innovations is more pronounced with firms owned by local governments and private firms than central government-owned firms. We also show that firms with fewer agency problems are inclined to have more green innovations.