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How Government Procurement Shapes Corporate Climate Disclosures, Commitments, and Actions

Tracks
Gallery 3
Monday, July 1, 2024
2:50 PM - 3:05 PM

Presenter

Dr Lynn Wang
Assistant Professor
University of Hong Kong

How Government Procurement Shapes Corporate Climate Disclosures, Commitments, and Actions

Abstract

This study examines how government procurement impacts firms environmental disclosures and whether they have tangible effects. Using a triple-difference (DDD) research design that exploits the exogenous increase in federal funding allocations to counties based on population census revisions, we find that firms with high exposure to government contracts significantly increase climate disclosure following expanded procurement opportunities. We also document that enhanced disclosure is characterized by a positive tone that emphasizes firms green investment and commitment to climate adaptation. The effect is more pronounced in counties with a greater increase in procurement volume and when firms have lower ex ante sustainability performance. Finally, we find that firms that increase climate disclosure walk the talk by reducing toxic emissions and enhancing green production, making them more likely to earn government contracts. Overall, our results suggest that government procurement promotes corporate climate responsibility by incentivizing environmentally progressive business practices.

Biography

Lynn Linghuan Wang is an assistant professor of accounting at HKU business school.

Chair

Yuyu Zhang
Senior Lecturer
Queensland University of Technology

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