Edinburgh Napier University

  As one of the main sources of greenhouse gas (GHG) emissions, firms must take primary responsibility for emission reduction. The major motivation of this study is that the government, as a legislative, may supervise and control corporate emissions by implementing regulations. The implementation of mandatory disclosure policies demonstrates this. This research examines whether the Companies (Directors Reporting) and Limited Liability Partnerships (Energy and Carbon Reporting) Regulations 2018 (the 2018 regulations) in the UK have a substantial influence on the corporate GHG information disclosure quality (IDQ). Besides, under the mandatory disclosure context, the impact of changes in corporate GHG IDQ on company financial performance (FP) and environmental performance (EP) is also explored.

In this study, content analysis and quantitative research methods are combined. Content analysis is used to examine reports of firms and build an index framework of enterprise GHG disclosure content, which provides data sources for GHG IDQ. Quantitative research contains three models to explore the influence of the 2018 regulations on the GHG IDQ and the impact of IDQ on corporate FP and EP. For the purpose of this research, the annual reports, financial indicators, and GHG emission data of the Financial Times Stock Exchange 350 Index (FTSE350) listed companies are gathered. Based on the institutional theory, it is proposed that there is a positive correlation between the release of the 2018 regulations and the quality of corporate GHG information disclosure. The time-fixed and individual-fixed ordinary least squares (OLS) model is used to examine the influence of the 2018 regulations on the company GHG IDQ. The findings provide evidence that the 2018 regulations will positively affect the GHG IDQ. Similarly, based on agency theory, stakeholder theory, voluntary disclosure theory, legitimacy theory and signaling theory, it is proposed that under the influence of mandatory disclosure regulations, there is a positive correlation between corporate GHG disclosure and corporate FP and EP. This research utilizes panel data and the OLS interaction model to test hypotheses that corporate GHG IDQ positively affects their FP and EP. The results reveal that when corporate environmental IDQ progressively increases, company FP gradually improves, and GHG emissions decline. The findings of this study give investors, managers, regulators, and sustainability groups updated policy implications and new perspectives.