Carbon Disclosure Effect, Corporate Fundamentals, and Net-zero Emission Target: Evidence from China

2025-08-24

AI Summary

This study investigates the impact of carbon disclosure quality on the financial performance of A-share listed firms in China, addressing national “dual carbon” policy objectives. Leveraging environmental reports from 4,336 enterprises, we pioneer the systematic application of natural language processing (NLP) techniques to quantify unstructured carbon-related textual disclosures, constructing a multidimensional carbon disclosure quality index. Empirical results demonstrate that higher-quality carbon disclosure significantly increases stock returns, return on equity (ROE), and Tobin’s Q, while reducing stock price volatility—establishing a causal, positive effect of carbon transparency on firm value and capital market outcomes. Our contribution lies in introducing an AI-driven text analytics framework for evaluating carbon disclosure quality in China, thereby advancing the economic consequences literature on ESG reporting with novel methodological rigor and micro-level empirical evidence.

Technology Category

• Natural Language Processing: Ethics — Bias, Fairness, Transparency & Privacy
• Search and Optimization: Evaluation and Analysis
• Data Mining & Knowledge Management: Intelligent Query Processing

Application Category

• Economics, Online Markets and Human Computation: LLM based quality controls for crowd work
• Search and Retrieval-Augmented AI: Web evaluation methodologies and metrics
• Web Mining and Content Analysis: Web data quality in the era of algorithmically-generated content

Abstract

In response to China's national carbon neutrality goals, this study examines how corporate carbon emissions disclosure affects the financial performance of Chinese A-share listed companies. Leveraging artificial intelligence tools, including natural language processing, we analyzed emissions disclosures for 4,336 companies from 2017 to 2022. The research demonstrates that high-quality carbon disclosure positively impacts financial performance with higher stock returns, improved return on equity, increased Tobin's Q ratio, and reduced stock price volatility. Our findings underscore the emerging importance of carbon transparency in financial markets, highlighting how environmental reporting can serve as a strategic mechanism to create corporate value and adapt to climate change.

Problem

• Examining carbon disclosure impact on financial performance
• Analyzing emissions data using AI and NLP tools
• Assessing carbon transparency's role in corporate value

Innovation

• AI natural language processing analysis
• Corporate carbon emissions disclosure evaluation
• Financial performance impact assessment