A test based on mediating and moderating effect models - the effect of corporate environmental performance on idiosyncratic risk

Abstract

With strong national advocacy and policy guidance, the coordination of economy and environment has become an issue that cannot be ignored nowadays. Proper understanding and handling of the relationship between economic development and environmental protection is conducive to promoting the high-quality development of China's economy and helping enterprises to take environmental benefits into account while pursuing economic benefits. In this context, based on multiple theoretical and empirical studies, this paper selects all A-share listed companies from 2011-2020 as the research object, constructs a multiple regression model with fixed industry and year, and innovatively explores the impact of corporate environmental performance on trait risk and its mechanism of action. The study shows that corporate environmental performance significantly reduces idiosyncratic risk, while corporate information quality mediates the relationship between the two, and media pressure positively moderates the relationship between corporate environmental performance and information disclosure quality. In addition, this paper also replaces the original explanatory variables with Chinese three-factor model regression residuals to estimate corporate idiosyncratic risk, and expands the explanatory variables to ESG to conduct robustness tests on all research hypotheses, which promotes the development of the investigation of the mechanism of ESG's influence on idiosyncratic risk. Based on the results of the above analysis, this paper is able to provide impetus for the improvement of the intrinsic environmental performance of companies and the external environmental concern coverage of media reports, and make marginal contributions to the promotion of high-quality economic development.