Does environmental liability insurance matter for firms’ environmental disclosure?

This paper investigates the influence of environmental liability insurance on corporate environmental disclosure for 384 Chinese listed firms during the period 2009 – 2018. We draw on stakeholder theory and find that environmental liability insurance can promote the quality of corporate environmental information disclosure through legitimacy pressure. We also find that, for firms with large environmental deficiency gaps, the positive effect of environmental liability insurance on disclosure is strengthened, whereas for firms with more slack resources, the positive effect is weaker. These findings have important theoretical and practical implications for how environmental liability insurance can enhance legitimacy and push firms to offer a more substantive response by triggering their environmental management and supervision. [ABSTRACT FROM AUTHOR]