Factors influencing corporate environmental disclosure and its impact on financing cost: empirical evidence based on listed pharmaceutical companies in China

Wang, Shiyi (2026) Factors influencing corporate environmental disclosure and its impact on financing cost: empirical evidence based on listed pharmaceutical companies in China. PhD thesis, UTAR.

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Abstract

With China's rapid economic development, environmental issues have become increasingly evident. Corporate environmental disclosure requires companies to publicly report their environmental activities, encouraging them to better fulfil their environmental responsibilities. Identifying the factors that influence such disclosure and understanding the economic motivations behind it are essential for establishing an effective mechanism that integrates internal and external forces. This promotes voluntary and proactive disclosure practices, thereby contributing to environmental protection. Based on stakeholder, legitimacy, signalling, and agency theory, this study aims to examine the influencing factors of corporate environmental disclosure and its impact on financing costs, as well as to explore the moderating role of corporate governance. Using panel data of listed pharmaceutical companies in China from 2018 to 2022, a multiple regression approach is adopted, and empirical tests are conducted using a Fixed Effects regression model. Additionally, robustness checks are performed using the system Generalised Method of Moments to iv address potential endogeneity concerns. Empirical findings indicate that first, regulatory pressure and firm profitability significantly enhance corporate environmental disclosure among Chinese listed pharmaceutical companies. Furthermore, corporate governance not only has a significant and positive influence on corporate environmental disclosure directly, but also exerts a moderating effect on the influence of regulatory pressure and firm profitability. However, there is no statistically significant correlation between media exposure and disclosure. Second, corporate environmental disclosure is found to significantly reduce both the cost of equity and the cost of debt, with corporate governance further strengthening this cost-reduction effect. Overall, the study highlights the broader relevance of corporate environmental disclosure by clarifying how external institutional pressures, internal firm conditions, and corporate governance jointly shape disclosure practices, and how such disclosure, when supported by effective corporate governance, carries meaningful implications for firms' financing outcomes. These implications are relevant for regulators, corporate managers, and capital market participants.

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