In order to account for the long-term impacts of strategies, the firm-level change in financial and carbon performance is calculated by comparing two different points in time, namely 20.
Data are sourced from a global sample of 45 leading enterprises from the steel, cement and automotive sector, including some of the largest GHG emitters in the world.
To assess the complex interactions between these strategic objectives, their determinants and outcomes, an integrative structural equation model is developed and empirically tested. It is argued that corporate carbon strategies have three main objectives: carbon governance, carbon reduction and carbon competitiveness. The aim of this article is therefore to analyze the determinants of such strategies and their influence on firms' financial and carbon performance over time. Readable annual reports can help in monitoring corporate insiders’ opportunistic behavior and thus reduce agency costs.So far, research has insufficiently addressed the long-term effectiveness of business responses to climate change in delivering actual outcomes. The positive effect of annual report readability is stronger in private firms than in state-owned enterprises, and becomes stronger after the implementation of new accounting standards in 2007. These results hold after several robustness checks. We find that firms with better annual report readability experience lower agency costs, and the negative association between readability and agency costs is more pronounced in firms with higher external audit quality, internal control quality or analyst coverage. Using 19,221 firm-year observations of Chinese A-share listed firms from 2001 to 2015, we investigate the association between annual report readability and corporate agency costs, where readability is proxied by report file length and/or file size. Difficulties with the readability of these reports may therefore have serious consequences. Annual reports are the main sources of information for outside investors’ investment decisions and enable shareholders to supervise the management.
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