Firm Size and Corporate ESG Disclosure: Exploring the moderating effect of the institutional environment in China

The quality of information in the capital market is crucial for investors to make informed judgments. Environment, social responsibility, and corporate governance (ESG) disclosure is widely recognized to contribute information transparency of capital market in China. Based on the signaling theory, this study aims to investigates the relationship between firm size and ESG disclosure and the moderating effect of the institutional environment (including government intervention and legal environment). Using 18,815 unbalanced firm-year observations from Chinese A-share listed companies for 2018 to 2022, the findings show that firms with a larger size tend to provide a higher quality of ESG disclosure and this positive relationship between firm size and ESG disclosure is more pronounced in the regions with less government intervention and a more developed legal environment. Furthermore, notable findings show that the moderating role of government intervention and the legal environment exerts a significant difference between heavily polluting industries and non-heavily polluting industries. The current ESG rating database cannot provide data for conducting further comparative analyses. Nonetheless, the findings and limitations provide future research directions on this topic.