Climate change disclosure and stock price informativeness, evidence from China

This study examines whether and how corporate climate change disclosure in the Management Discussion and Answer section of annual reports affects its stock price informativeness. The empirical findings of the study suggest that firm climate change disclosure could significantly increase stock price informativeness by reducing stock price synchronicity. Further channel tests suggest that corporate climate change disclosure significantly increases stock price informativeness through higher media attention, larger institutional ownership percentages, and more corporate site visits. Further analysis shows that the positive impact of climate change exposure on stock price informativeness is more pronounced for more readable and negative annual reports. Finally, we find that opportunity shock information within the MD&A section is an important component of climate change disclosure.