Understanding the Impact of Mandatory CSR Disclosure on Green Innovation: Evidence from Chinese Listed Firms

Drawing on the institutional view of legitimacy theory, we examine whether and under which conditions a policy tool, mandatory corporate social responsibility (CSR) reporting, enforced by constituents positively triggers firms to make substantive environmental responses. Using China's 2008 CSR reporting policy as a quasi-natural experiment and the difference-in-differences estimation approach, the results reveal that after implementation of this policy, mandatory CSR reporting firms show substantially higher green innovation performance than non-CSR reporting firms. We further find that this effect is stronger for firms located in areas with high environmental enforcement intensity, for state-owned enterprises and for those with higher levels of media coverage. Moreover, we make a nuanced investigation on whether the media coverage is laden with a negative or positive tone, and find that both negative and positive coverage strengthen the relationship between mandatory CSR disclosure and green innovation.