Mandatory greenhouse gas emissions reporting and firm environmental litigation risk

Huang, Chen, Patsika, Victoria ORCID: https://orcid.org/0000-0002-5763-2020, Triantafylli, Androniki and Zhang, Yu 2023. Mandatory greenhouse gas emissions reporting and firm environmental litigation risk. Accounting Forum 47 (2) , pp. 249-277. 10.1080/01559982.2022.2158519

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Abstract

We investigate the impact of mandatory non-financial reporting on corporate environmental litigation risk. Using a difference-in-difference research design, we reveal that the introduction of the Greenhouse Gas Reporting Program (GHGRP) in the U.S. reduces corporate environmental litigation risks. The result is robust to various sensitivity checks, including placebo tests. Further analysis documents that the enhanced corporate social responsibility in the post-GHGRP period serves as a channel for the lowered litigation risk. We also find that the effect of GHGRP on reducing litigation risk is more pronounced in the headquarters location with a large population because firms face greater community stakeholder pressure. Further empirical evidence shows that GHGRP attracts more investors’ attention, thereby leading to worsened stock returns around the litigation. Overall, the study emphasizes the critical role of mandatory GHG emissions reporting practice in shaping firms’ environment-related behavior.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Taylor and Francis Group
ISSN:	0155-9982
Date of Acceptance:	9 December 2022
Last Modified:	06 Jan 2024 04:31
URI:	https://orca.cardiff.ac.uk/id/eprint/157471

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