Government Subsidies and Environmental Disclosure Quality: Evidence from Chinese Listed Firms

Abstract

This study examines the association between government subsidy intensity and a proprietary Wind-based proxy for environmental disclosure quality in Chinese listed firms. Using 20 713 firm-year observations from 2020 to 2024, the analysis employs firm and year fixed effects with province-clustered inference. Government subsidy intensity is positively associated with the Wind environmental score (coefficient = 0.0218; wild-cluster p = .0014). The association remains positive after zero scores are excluded, but subsidies do not predict whether a positive score is observed. A lagged specification is not statistically significant, whereas future subsidy intensity predicts current scores, indicating that subsidy allocation may partly respond to firms' existing disclosure characteristics. Subsidies are not associated with reported carbon-emission intensity or total emissions among positive reporters. Supplementary evidence shows a small analyst-attention component and a stronger association among non-state-owned firms. The results establish an economically modest association, not a causal effect.