Impact of Carbon Emission Trading System Participation and Level of Internal Control on Quality of Carbon Emission Disclosures: Insights from Chinese State-Owned Electricity Companies

Tan, Duojiao; Bilal; Gao, Simon; Komal, Bushra

Abstract

In recent years, the quality of carbon emission disclosures has become a central area of concern for different stakeholders of companies. Specifically, stakeholders of state‐owned enterprises (SOEs) want these companies to legitimize their actions regarding carbon emissions reductions reporting. The current study aims to explore the impact of carbon emission trading system participation and the level of internal control on the quality of carbon emission disclosures. Using a sample of Chinese state‐owned electricity companies from 2012 to 2018 and employing the difference‐in‐differences (DID) method, we find a positive impact of the carbon emission trading system participation on the quality of carbon emission disclosures, which suggests that the state‐owned electricity companiesʹ participation in the carbon emission trading system leads to the higher quality of carbon emission disclosures. Likewise, we find a positive relationship between the level of internal control and the quality of carbon emission disclosures, which suggests that the state‐
owned electricity companies with stronger internal control provide the higher quality of carbon emission disclosures. In addition, we find that the findings are only significant in the case of central SOEs as compared to local SOEs. Our findings contribute to the practical, policy, and research implications as the quality of carbon disclosures is the primary concern from a variety of stakeholders.

Citation

Tan, D., Bilal, Gao, S., & Komal, B. (2020). Impact of Carbon Emission Trading System Participation and Level of Internal Control on Quality of Carbon Emission Disclosures: Insights from Chinese State-Owned Electricity Companies. Sustainability, 12, Article 1788. https://doi.org/10.3390/su12051788

• Journal Article Type: Article
• Acceptance Date: Feb 25, 2020
• Online Publication Date: Feb 27, 2020
• Publication Date: Feb 27, 2020
• Deposit Date: Mar 3, 2020
• Publicly Available Date: Mar 3, 2020
• Publisher: MDPI
• Peer Reviewed: Peer Reviewed
• Volume: 12
• Article Number: 1788
• DOI: https://doi.org/10.3390/su12051788
• Keywords: carbon emission disclosures; low carbon; carbon emission trading system; internal control; electricity companies; state-owned enterprises
• Public URL: http://researchrepository.napier.ac.uk/Output/2603713