Environmental protection tax reform and corporate Climate Risk Disclosure

The reform of the environmental protection tax (EPT), a crucial policy instrument for combating climate change, significantly influences corporate climate risk. Hence, a thorough examination of the connection between EPT and corporate climate risk disclosure (CRD) is essential for companies to better evaluate the risks and challenges they encounter. The findings of the research indicate: (1) EPT reform substantially boosts corporate CRD. (2) Mechanism tests demonstrate that EPT enhances corporate CRD via three pathways: increasing public environmental awareness, fostering green innovation, and improving total factor productivity. (3) Heterogeneity analysis shows that various factors such as micro-level corporate characteristics (ownership and corporate life cycle), industry features (high-tech industries and factor intensity), and macro-level aspects (urban location, size, and resource attributes) differentially affect the impact of EPT. (4) Additional analysis from the perspective of institutional investors indicates that a higher proportion of institutional investor holdings amplifies the positive effect of EPT on corporate CRD. These research conclusions aid in accurately assessing the CRD impact of EPT and provide empirical support for policy development and modification.