Essays on sustainability, corporate disclosure, and economic uncertainty : a thesis presented in fulfilment of the requirement for the degree of Doctor of Philosophy in Finance at Massey University, Manawatu Campus, New Zealand

Abstract

This thesis consists of three essays. Essay one investigates the relationship between accounting conservatism, specifically bad news timeliness, and corporate environmental disclosure. This study identifies a significant negative relationship between the timeliness of bad news disclosure and corporate environmental disclosure. Further analysis indicates that socio-political pressures moderate this relationship. Specifically, while firms generally align with stakeholder preferences by promptly disclosing negative earnings news, those with executives in government-nominated positions tend to increase environmental disclosure due to stronger socio-political pressures. Additionally, the negative association between bad news timeliness and environmental disclosure is weaker among heavy polluters, who face stricter environmental regulations. This study underscores how top management strategically handles the disclosure environmental information. Essay two explores the impact of oil price uncertainty (OPU) on corporate green innovation disclosure behaviour. Drawing on textual analysis of annual and social responsibility reports from Chinese listed companies, the study constructs an innovative measure of green innovation disclosure intensity. It identifies a significantly positive relationship between oil price volatility and the level of green innovation disclosure, suggesting that firms respond to energy uncertainty by enhancing transparency about their environmental sustainability. Robustness checks and endogeneity analyses confirm these findings. Furthermore, the analysis reveals that firm-level characteristics, such as environmental performance, legitimacy demands, and political connections, moderate this relationship. The positive effect is amplified in firms exposed to higher regional environmental regulation intensity and market-based green initiatives. This essay contributes to the growing literature on corporate sustainability by demonstrating the role of energy uncertainty in shaping corporate transparency in green innovation. Essay three examines the interplay between firms oil price uncertainty sensitivity and corporate green innovation in the context of geopolitical tensions. Using a unique measure of firm-level geopolitical tensions derived from destination country-firm data in the China Customs Dataset, the study finds that firms more exposed to OPU are more likely to engage in green innovation. Geopolitical tensions significantly amplify this relationship, with tensions originating from supplier countries further amplifying the urgency for green innovation efforts. Additional analyses reveal that domestic supply chain alliances and improved supply chain efficiency reduce urgency of green innovation when facing heightened uncertainties. Moreover, we find that the interacted impacts of OPU exposure and geopolitical tensions on green innovation are more pronounced in firms with higher international exposure, lower government subsidies, and greater competitive pressures. This essay underscores the influence of external shocks, such as energy and geopolitical crises, in driving firms toward sustainable innovation strategies.