Does Green Finance Policy Contribute to ESG Disclosure of Listed Companies? A Quasi-natural Experiment from China

Abstract


INTRODUCTION
Since the 21st century, China has incorporated sustainable development strategies into long-term planning for economic and social development.The Cleaner Production Promotion Act of 2002 makes provisions for the efficient use of resources and pollution reduction.From the 15th to the 20th National Congress of the Communist Party of China (CPC), the national congress reports respectively elaborated "the implementation of sustainable development strategy", "must put sustainable development on a very prominent position", "building ecological civilization", "vigorously promoting the construction of ecological civilization", "accelerating the reform of the ecological civilization system", and "promoting the harmonious coexistence between human and nature", which achieved layer by layer progressive leap of the economic, social and ecological harmonization from the concept to the system.Following the continuous evolution of the two-way opening of China's capital market, more and more international investors adhering to the green and responsible investment philosophy have started to participate in China's stock market, which has promoted the further recognition of environmental, social and governance (ESG) investment principles in China's capital market.However, for Chinese listed companies, there are still doubts about the value effect of ESG practices and a lack of intrinsic motivation to improve ESG disclosure (Kim and Yoon, 2022).
In 2016, the People's Bank of China (PBC) and six other ministries jointly issued the "Guidance on Building a Green Financial System" (the Guidance), which marked China as the first economy in the world to establish a relatively complete green finance policy system.The Guidance proposed that government is supposed to gradually establish and improve a mandatory environmental information disclosure system for listed companies and debt-issuing enterprises.This paper investigates the impact of the Guidance on ESG disclosure of listed companies employing difference-in-differences (DID) method.We find that the publication of the Guidance positively affects the ESG disclosure quality (ESGdq) of listed companies.
general framework for establishing a green financial system.In 2016, the Guidance made a top-level design for green finance development, a significant breakthrough for Chinese green finance policies.In 2019, China's National Development and Reform Commission (DRC) and six other ministries and commissions jointly issued the "Green Industry Guidance Catalogue (2019 Edition)", which puts forward the development emphasis on green industries.In 2021, the CPC Central Committee and the State Council issued the "Opinions on Completely and Accurately Implementing the New Development Concept and Performing the Work of Carbon peak and Carbon Neutrality", which proposed to support eligible enterprises to list and refinance for the construction and operation of green and low-carbon projects and expand the scale of green bonds.In the same year, the State Council of China released the Action Plan for Carbon Peak by 2030, which proposes to expand the depth and breadth of the green bond market and support eligible green enterprises to list and refinance (Sun et al. 2022b).

ESG Disclosure Regulation for Listed Companies in China
Created in 1990, China's capital market has made tremendous development over the past 30 years, with the SSE, SZSE, and Beijing Stock Exchange (BSE) now (Kathiravan et al. 2021).China's capital market has become an integral part of the economic system and aims to building an international financial center (Li and Xu 2022).At the same time, China's capital market needs to consolidate the "barometer" function of economic development unremittingly, continue to deepen two-way opening, effectively enhance the level of capital market opening and steadily improve the multi-level capital market system (Yan and Qi, 2021).The regulatory history of ESG disclosure in China's capital market can be roughly divided into three stages (Akbar et al. 2021;Huang et al. 2021), namely the voluntary disclosure before 2008, a combined voluntary and mandatory disclosure from 2008 to 2015, and the mandatory disclosure from 2015 to the present.In December 2008, the SSE and SZSE simultaneously issued the Notice on the Work of 2008 Annual Reports of Listed Companies (Han et al. 2019), which required companies listed on the SSE Corporate Governance Index, companies issuing overseas-listed foreign shares, and financial companies to disclose their social responsibility reports at the same time as their 2008 annual reports, and required listed companies included in the SZSE 100 Index to disclose social responsibility reports, and encourages other companies to disclose social responsibility reports.In 2002, China Securities Regulatory Commission (CSRC) issued the Code on Governance of Listed Companies, which clarified the social responsibility of listed companies for the first time (Sun et al. 2022a).In 2018, CSRC revised the Code on Governance of Listed Companies to build a framework for ESG disclosure for listed companies in China for the first time (Ruan and Liu 2021).In 2015, the CPC Central Committee and the State Council published the Integrated Reform Plan for Promoting Ecological Progress, which proposed establishing a mandatory disclosure mechanism for environmental information of listed companies (Tang et al. 2022).Since then, the construction of a regulatory mechanism for mandatory disclosure of environmental information of listed companies in China has entered the "fast track" (Du et al. 2022).In 2017, the CSRC and the former Ministry of Environmental Protection (MEP) jointly signed the Cooperation Agreement on Jointly Carrying Out Environmental Information Disclosure for Listed Companies, which clearly stated that "a mandatory environmental information disclosure system for listed companies and debt-issuing enterprises shall be gradually established and improved" (Dong and Zheng 2022).In 2017, the CSRC issued the "Guidelines on the Content and Format of Information Disclosure by Companies Issuing Public Securities No. 2: Content and Format of Annual Reports (Revised 2017)", which mandated listed companies or their significant subsidiaries that are among the key emission enterprises announced by the environmental protection authorities to disclose environmental information in their annual reports.In 2022, the CSRC issued the Guidelines on Investor Relations Management for Listed Companies, introducing ESG disclosure in investor relations management for the first time.In 2022, the SSE issued "No. 9 of the Self-regulatory Guidelines for Listed Companies on the SSE: Evaluation of Information Disclosure Work" and the SZSE issued "No.11 of the Self-regulatory Guidelines for Listed Companies on the SZSE: Evaluation of Information Disclosure Work", both of which required evaluation of the ESGdq of listed companies.
The Guidance focuses on promoting the building of a green finance system covering banks, securities, insurance, funds and environmental equity trading markets.The introduction of the Guidance marked that China became the first country to establish a comprehensive green financial system driven by the government, and the year of 2016 is also known as the "starting line" of green finance development in China.Since then, China's green finance has entered an era of speedy and comprehensive development.The Guidance stated clearly the important role of the securities market in supporting green investment, called for unifying the criteria for defining green bonds, actively supporting the listing and refinancing of eligible green enterprises, supporting the development of green bond indices, green stock indices and related products, and gradually establishing and improving a mandatory environmental information disclosure system for listed companies and debt-issuing enterprises.The green finance system imposes specific requirements on ESG disclosure in securities market (Wang et al. 2022a).It is valuable for policymakers, listed companies and investors to investigate the impact of China's green finance policy on ESG disclosure by listed companies.

Effectiveness of Green Finance Policy
Green finance has a strong spatial agglomeration and spillover effect (Wu 2022), which could promote green (Xu et al. 2022) and high-quality economic development (Feng et al. 2022;Liu et al. 2020;Liu et al. 2021), effectively mitigate environmental pollution and climate change (Zhang et al. 2022f), improve the ecological environment (Ge et al. 2022;Li et al. 2022a), enhance energy efficiency (Peng and Zheng 2021), contribute to industrial transformation and upgrading (Xiong and Sun 2022) (but showing a downward trend (Gu et al. 2021)), ecologize the industrial composition (Meng 2021), optimize the industrial structure (Gao et al. 2022), and boost innovation capacity (Li and Yang 2022;Zhao et al. 2022).However, there is no consistent conclusion on the impact of green finance on firm behavior.Some scholars found a positive linear relationship between green finance and corporate green performance (Abbas et al. 2021), while others revealed a significant "U-shaped" curve between green finance development and corporate total factor efficiency (Huang 2022).Some researches even suggested that green finance mechanisms may have a progressive negative transformational impact on environmental and social responsibility (Sinha et al. 2021), and that green finance harms the environmental performance of firms in Chinese heavily polluting industries by increasing financing constraints, reducing environmental investment, and weakening technological innovation (He et al. 2022).Some studies argued that the implementation of green finance policy can reduce carbon emission intensity (Muganyi et al. 2021;Wu et al. 2021;Zhang et al. 2021a;Zhang et al. 2022g) with spatial spillover effect (Chen and Chen 2021; Li and Gan 2021), but other discovered significantly negative effects of green financial instruments on carbon emissions intensity (Wang et al. 2021a;Wang et al. 2021b).Green finance policy can control air pollution status, but there is heterogeneity in the reduction effect on different greenhouse gases (Zhang et al. 2022a).Green finance policy may have a negative impact on the quality of the surrounding environment when it has improved the quality of the local environment (Huang and Chen 2022).Academics still have different insights on the effects of green finance policy on micro-firm development.Policy uncertainty and financial system short-termism are two major obstacles to sustainable business growth (Hafner et al. 2020).Long-term and sustained environmental policies are better than short-term incentives for boosting corporate green investment (Criscuolo and Menon 2015).For example, it has been found that green credit policy provides stimulus to firms' short-term financing but inhibits firms' investment behavior in the long run (Zhang et al. 2021a).Green credit policy significantly reduces short-term and long-term debt financing for heavily polluting firms but does not adequately restrict short-term debt financing (Peng et al. 2022).Green finance policy contributes to firms building finance ecosystems and low-carbon investments (Owen et al. 2018), reducing financing costs and promoting new energy investments (Tu et al. 2021), and alleviating financing constraints for green innovation (Yu et al. 2021).
China is expected to become a global leader in promulgating green finance notions (Xu and Zhu 2022).The scholarly investigation of the effects of China's green finance policy consists of three main aspects.Firstly, the research on the harmonization of China's green finance policy and green economy.It was revealed that China has not yet achieved an overall synergistic coupling of green finance and green development (Shi 2022), and that there are more significant regional differences (Zhang et al. 2022d) and imbalances (Wang et al. 2022b) in the coordinated development of green finance and green economy.The impact of green finance on green development in China has a significant single-threshold effect (Zhang et al. 2022e).Secondly, China's green credit policy effect.China's green credit policy has not been sufficiently implemented (Zhang et al. 2011), and played a role in steering listed firms toward greenness through debt financing redistribution (Li et al. 2022b).However, research has found that green credit policy has a negative effect on the total factor productivity of manufacturing firms in China (Feng and Liang 2022).Third, the research on the policy effects of China's green finance pilot zone.China's green finance pilot zone policy has a long-term value-enhancing effect on green firms (Hu et al. 2021), a transmission effect on regional environmental performance improvement (Huang and Zhang 2021), an induced effect on regional and firm green technology innovation (Zhang et al. 2022b, Zhang andLi 2022), and a reduction of illegal emissions from heavily polluting enterprises in the pilot zones (Zhang and Lu 2022).

External Pressure of ESG Disclosure
Most studies demonstrated the effect of external institutional pressures on corporate environmental disclosure (Kerret et al. 2010).Strict environmental regulation has greatly contributed to the level of environmental disclosure (Wu and Memon 2022;Zheng et al. 2020).Legitimacy requirements of national policies and market-incentivized financing demand mutually contribute to sustainable accounting and reporting by listed companies (Ng 2018).Firms with higher environmental legitimacy pressure have stronger incentives to manage impressions of carbon disclosure (Luo et al. 2022).Environmental regulation has a significant facilitative effect on local green innovation and a negative spatial spillover effect on green innovation in neighboring regions (Ma et al. 2022).Mandatory environmental disclosure institutions have functions such as reflexive, deterrent, and enhancement mechanisms (Liu et al. 2010).Industry sensitivity is the main driver of social and environmental disclosure among Chinese listed companies (Dyduch and Krasodomska 2017;Liu and Anbumozhi 2009;Suarez-Rico et al. 2018;Zeng et al. 2010).Environmental administrative penalties have a significant positive effect on the level of voluntary disclosure of environmental information by enterprises (Ding et al. 2019).It has been shown that negative media coverage significantly enhances the quality of environmental information disclosure of listed companies, and the interaction between public media and local government regulation has a significant positive effect on the quality of corporate environmental disclosure (Xue et al. 2021).Investors' criticism on social media not only prompted companies to disclose their CSR activities, but also increased the materiality of CSR reports (Zhang and Yang 2021).

Intrinsic Dynamics of ESG Disclosure
Firm size is an important internal factor affecting ESG disclosure, and most studies have demonstrated a positive relationship between firm size and ESG disclosure (Ali et al. 2018;Chen et al. 2022a;Gallego-Alvarez and Quina-Custodio 2016;Lu and Abeysekera 2014;Miklosik et al. 2021;Mura et al. 2019;Nguyen et al. 2021).Corporate governance has a strong influence on ESG disclosure (Bae et al. 2018;Bamahros et al. 2022), and a high level of corporate governance facilitates the legitimate management and disclosure of social responsibility information (Liu and Zhang 2017).Corporate governance promotes CSR reporting in the form of a socially responsible board of directors, while government shareholding influences the quality of CSR reporting, and corporate governance moderates some of the cultural influences that are detrimental to CSR reporting (Adnan et al. 2018).The quality of financial information in the previous period positively impacts on the quality of sustainability information in the current period (Abeysekera et al. 2021).Capital expenditure and corporate governance are positively associated with carbon disclosure, and corporate governance strengthens the relationship between capital expenditure and carbon disclosure (Karim et al. 2021).Corporate governance structure (board size, board independence and cross-listing) plays an important role in ESG disclosure; low corruption perceptions reflect higher levels of ESG disclosure (Khalid et al. 2022).
The performance pressure of listed companies has a positive effect on environmental disclosure (Xu et al. 2021), and disclosure of corporate environmental responsibility increases when companies do not meet performance expectations (Zeng et al. 2020).Some studies revealed that corporate profitability is positively associated with carbon disclosure (Yu et al. 2020), companies with good financial performance disclose more ESG information (Gutierrez-Ponce et al. 2022), and financially distressed firms have lower quality ESG disclosure than non-distressed firms (Harymawan et al. 2021).Business environmental management innovation impacts ESG disclosure positively (Bellamy et al. 2020).Companies with better CSR performance are more likely to publish more CSR reports (Uyar et al. 2020).Environmental performance is positively related to environmental disclosure, while social performance is not related to social disclosure (Danisch 2021).It has also been found that environmental performance is negatively related to environmental disclosure (Doan and Sassen 2020).Some studies found that the relationship between environmental performance and environmental disclosure is "non-linear", with both poor and good performers having higher environmental disclosure than median performers (Meng et al. 2014).A U-shaped non-linear relationship exists between corporate environmental performance and environmental disclosure (Li et al. 2017).
Executive and board characteristics affect ESG disclosure.The MBA educational background and average age of top managers positively influence environmental disclosure (Ma et al. 2019).Executives having military experience lead to a lower level of environmental disclosure, furthermore, the chairman with military experience is significantly negatively related to environmental disclosure, and the CEO with military experience is not significantly related to environmental disclosure (Chen et al. 2021).CEO tenure has a negative impact on corporate social and environmental disclosure (Khan et al. 2021).Executive departures and political ties are negatively related to the quality of CSR disclosure (Rauf et al. 2021).Companies with busy CEOs or longer tenures disclose less CSR information; companies with CEOs who regularly attend board meetings disclose more CSR information (Ratri et al. 2021).Board size is positively associated with the quality of environmental and sustainability information disclosure (Hu and Loh 2018), the proportion of independent directors and the separation of chairman and CEO are positively associated with environmental information disclosure (Giannarakis et al. 2020), and the gender ratio of the board and the proportion of foreign directors are not significantly associated with the quality of environmental information disclosure (Agyemang et al. 2020).The percentage of director holdings is negatively correlated with the disclosure of sustainability reports (Wang 2017).There is a significant correlation between board governance and sustainability disclosure.Equity concentration does not have a significant effect on the overall environmental accounting information quality of firms (Liu and Bai 2022), equity concentration tends to reduce non-financial information disclosure, and individual top shareholders have a positive effect on non-financial information disclosure (Pham et al. 2020).Foreign ownership has a significant impact on overall sustainability disclosure (Rustam et al. 2019) and may promote the voluntary release of carbon emission information (Kim et al. 2021).
In addition, corporate social responsibility policy has a positive impact on environmental disclosure (Corvino et al. 2020).By creating a specific CSR committee, corporate transparency in sustainability is directly linked to the independence and diversity of directors (especially the number of female directors) and the specialization of functions (Fuente et al. 2017;Mahmood et al. 2018).Female directors play a critical role in promoting sustainable corporate disclosure (Zahid et al. 2020).Companies with a compensation committee are more likely to disclose corporate social responsibility information (Bel-Oms and Segarra-Moliner 2022).Centralization of decision-making power can facilitate CSR disclosure by group companies (Masud et al. 2022).A pessimistic tone in the income statement in the Management's Discussion & Analysis (MD&A) is significantly and positively associated with CSR disclosure; busy CEOs strengthen these relationships (Ningsih et al. 2021).Family firms are more likely to shift their focus on surplus management through CSR disclosure, although the level of family ownership plays a moderating role (Gavana et al. 2017).
In summary, academics achieved considerable research results in two areas: the effects of green finance policies, and the determinants of ESG disclosure of listed companies.Although the literature mentioned above has focused on the ESG disclosure of listed companies and the green finance policy respectively, few combine them.Very little literature has been found combining green finance policy with ESG disclosure.For example, Wang et al. (2019a) believed that green credit policy and green credit behavior did not cause an increase in the quality of corporate environmental disclosure, and the environmental disclosure system did not send valuable signals to the capital market.This study will fill the gap on the impact of green finance policy on ESG disclosure of listed companies, and will apply the well-established quasi-natural experiment method and DID model to test the policy effects of the Guidance on ESG disclosure of listed companies in China.

THEORY AND HYPOTHESIS DEVELOPMENT
First, green finance policy can alleviate ESG information asymmetry in the capital market, prevent market failures in ESG investment decisions, help build a unified ESG disclosure standard, and guide listed companies to standardize ESG disclosure.Institutional research can be traced back to the "ceremony conformity" view of the new institutionalist, which emphasizes that enterprises conform to institutional rules due to compulsory, imitative, and normative isomorphism (DiMaggio and Powell 1983) to obtain legitimacy (Meyer and Rowan 1977).Market failure is the most direct cause of government regulation, and safeguarding the rights and interests of the public is the primary purpose of government regulation.China's capital market is not yet perfectly efficient, and information asymmetry is still relatively prominent (Li et al. 2021).ESG information is voluntary disclosure, and ESG disclosure by listed companies can reconcile the information asymmetry among market stakeholders.However, listed companies are likely to passively disclose or not disclose ESG information under the current imperfection of China's capital market.The government plays a mandatory role in monitoring the release of ESG information of listed companies, and can urge listed companies to comply with the relevant regulations when releasing ESG information.In addition, government supervision is more necessary for those companies that are weak in environmental awareness and not self-disciplined to restrain companies from illegal profit-seeking behavior and enhance the external pressure to disclose high-quality ESG information.The Guidance proposed to "vigorously develop green credit" and "promote the securities market to support green investment".Green credit policy requires listed companies to disclose more and more credible ESG information to satisfy financial institutions or social funders to evaluate the ESG risks of lenders or investment projects.There is an urgent need for green investors in the securities market to use ESG information released by listed companies to assist them in making rational investment decisions, such as green securities purchasing and green stock investments.Therefore, green finance policy will effectively regulate the issuers, certifiers, investors and other participants of green finance products, and promote the spontaneous improvement of the quantity and quality of ESG information of listed companies by constructing unified ESG evaluation standards, strengthening the enforcement of relevant systems, and increasing the punishment of non-compliant disclosures, and supervising listed companies to perform true, complete, timely and accurate public disclosures.
Secondly, green finance policy is conducive to listed companies to enhance the "environmental isomorphism" of ESG disclosure, which exerts pressure and motivation on listed companies to legitimize ESG disclosure.Suchman (1995) argued that organizational legitimacy refers to stakeholders' perceptions and judgments of whether a company's behavior is consistent with social expectations and appropriate under a socially constructed system of norms, values, and beliefs.If an organization does not adhere to socially acceptable goals, methods and outcomes, it will not operate successfully, or it will not survive at all.It is precise because there is an underlying pact between a company and the market on which it depends that it can emerge, grow and become strong.Thus, the market should follow the optimal principle of allocation of resources, so that those enterprises that comply with the law and perform well can obtain more and better resources, and these quality resources are the most necessary prerequisites for the healthy and sustainable development of enterprises.To obtain these resources companies will continuously pursue legitimacy, adapt to external pressures, and continuously gain public recognition, thus forming a healthy competition and virtuous circle in the market.
As stated by the legitimacy theory, ESG disclosure is a reaction to the pressure exerted by institutional and public stakeholders (Larrinaga et al. 2009).The impact of legitimacy theory on ESG disclosure of listed companies is mainly reflected in two aspects: legitimacy pressure and legitimacy management.The core of legitimacy theory is the social contract.Stakeholders and firms are linked by various explicit or implicit social contractual relationships.Different stakeholders exert different degrees of legitimacy pressure on companies based on different economic or social interests.Faced with legitimacy pressure from different stakeholders, companies respond by legitimacy management.The strategic choice of legitimacy management requires assistance with information disclosure.ESG disclosure is a reasonable choice under the legitimacy theory, and the practice reflects listed companies' choice to adapt and control the sustainable development environment.If a listed company's business practices do not comply with the various ESG disclosure rules set by the government, it will be directly punished by government laws.On the contrary, by actively and proactively disclosing ESG information, companies can help establish a favorable image in front of the public, gain more public recognition, receive legitimacy and seek benefits for the company's development.The Guidance proposed to establish a mechanism for sharing corporate environmental information, improve the mandatory environmental information disclosure system for listed companies and debt-issuing enterprises, and develop financial instruments such as carbon emission rights.These mechanisms provided the conditions for the necessity and effectiveness of legitimacy pressure and legitimacy management for ESG disclosure by listed companies.
Finally, ESG disclosure is an important signaling tool for listed companies.Since problems such as adverse selection and moral hazard arise under conditions of information asymmetry, then parties with superior and inferior information resources have to use the same message to communicate their true intentions to their counterparties.The company's ESG information is communicated to the outside world through information disclosure, focusing on the company's proactive environmental management, proactive social responsibility, corporate planning and management, and the company's sustainable development.
Stakeholders can get a more comprehensive understanding of the investee company by viewing the information publicly available to the public, which helps them to make reasonable decisions.The signaling theory explanation of green finance policy to promote ESG disclosure of listed companies can be developed from three aspects.Green finance policy can be more conducive for listed companies to use ESG disclosure as a signaling tool to transmit superior ESG performance to the market and win market response to generate extra market returns.Green financial policies facilitate signaling among listed companies, reducing the cost for listed companies with lower ESG disclosure levels to imitate listed companies with higher ESG disclosure levels, which enhances the overall ESG disclosure level of the capital market.Green finance policy also provides a disciplinary mechanism for non-compliant disclosure, and this reverse signal provides listed companies with "bottom-line" thinking, which helps the overall compliance of ESG disclosure.
In summary, excellent companies not only have well fixed asset holdings and favorable market ratings, but can also discipline themselves to adhere to statutory compliance in disclosure.This requires the government to strengthen supervision and management, allocate the functions of administrative and supervisory authorities, trading platforms and other market intermediaries in accordance with the law, and reasonably distribute the resources of public institutions, while ensuring that companies can release ESGrelated information in a comprehensive, correct and complete manner and improve the quality of ESG disclosure.Good ESG disclosure can increase company value and leads to higher social benefits.The advantage of multi-departmental joint supervision is that there is no longer a single regulatory body, and the supervision can involve multiple areas of information disclosure of listed companies, which makes government supervision more comprehensive and in place, and better supervises listed companies to make ESG disclosure according to the system requirements.we generate the hypothesis for this study as:

Hypothesis 1 (H1). Since 2016, the Guidance issued by the PBC and six other ministries and departments has improved the ESGdq of listed companies in China.
The theoretical framework of this paper is shown in Figure 1.

Sample and Data
This paper selects A-share listed companies on the main board of the SSE and the SZSE from 2014-2018 as the research sample.We use heavily polluting industry listed companies as the test group and non-heavily polluting industry listed companies as the control group.We screened the sample as follows: (1) companies marked with ST (Special Treatment) and * ST are excluded considering the authenticity and accuracy of the data; (2) listed companies with missing or abnormal data were excluded considering the comparability and validity of the data.The final sample contains data for 1076 listed companies from 2014-2018, with a total of 4894 observations (as shown in Table 1).The ESGdq scores of listed companies are from the Bloomberg database, and the rest of the data are from WIND and CSMAR.We apply Stata MP 16.0 for descriptive statistics and regression analysis.

Dependent Variable
The ESGdq was selected as the dependent variable.Drawing on Fazzini and Maso (2016) and Minutolo et al. (2019), The Bloomberg ESG disclosure score was employed as a proxy for the ESGdq.Bloomberg ESG disclosure score incorporates three different disclosure dimensions, namely, Environmental, Social and Governance.The ESG disclosure score ranges from 0.1 for companies revealing a minimum amount of social and environmental data to 100 for those that divulge all data points.The ESG rating system provided by Bloomberg is a mechanism for publicly indicating to market investors the extent to which ESG data is publicly available, and the metrics can convey a level of social risk information to a wide range of investors.The ESG information submitted by Bloomberg is collected from corporate social responsibility reports or sustainable growth reports or other public communication materials, making the ESG evaluation system more appropriate for measuring corporate social responsibility activities.Bloomberg will penalize companies with "missing data" by adding or subtracting points, which makes the scoring process fairer and more reasonable.To differentiate the ESG evaluation index from other companies, the company gives ESG scores to its listed

Independent Variable
The independent variable is the DID term (Treat × Time), the multiplication of the experimental variable and the time variable.Experimental variables (Treat): grouped according to whether the company is a listed company in a heavily polluting industry, Treat = 1 if it is a listed company in a heavily polluting industry, 0 otherwise; Time variables (Time): Time = 1 if the time is after 2016, 0 otherwise.

Control Variables
Drawing on Karim et al. (2021) and Gholami et al. (2022a), we control for variables related to firm characteristics and corporate governance that may have impact the quality of corporate ESG disclosure, including Company Size (Lnasset), Company Age at IPO (Age), Financial Leverage (Lev), Profitability (Roe), Cash Flow Ratio (Cashflow), Growth Capacity (Growth), Ownership Nature (State), Time Fixed Effect (Year) and Firm Fixed Effect (ID).The definitions of the variables and descriptions are shown in Table 2.

Model Development
When testing the impact of regulatory system implementation, the DID method is usually used for regression analysis.Drawing on Bertrand et al. (2004) and Zhang et al. (2022c), this paper sets up the following model (1) and considers the error problem.
, =  +  1  ×  +  2  +  3  +  , +  +  +  , (1) In model (1), ESGdq represents the quality of ESG disclosure, i represents the listed company, t represents the time, Time represents the implementation of the Guidance, Treat represents whether it is a listed company in a heavily polluting industry, X represents the control variable, Year represents the year, ID represents the company code.Ɛ is a random disturbance term.When analyzing the regression results, this paper is interested in the coefficient of Treat × Time.If the coefficient of Treat × Time is significant in model (1), it means that the implementation of the Guidance has significantly improved the quality of ESG disclosure by listed companies and hypothesis 1 gets verified.

Descriptive Statistics
The descriptive statistics of the main variables are shown in Table 3.There are 1076 sample companies with 4894 observations in this study.The mean value of Time is 0.610, which indicates that 61% of the sample is after 2016, and the mean value of Treat is 0.680, which shows that 68% of the sample companies are in the heavy pollution industry.The minimum value of ESGdq is 1.240, the maximum value of ESGdq is 61.720, the mean value of ESGdq is 20.740, and the standard deviation of ESGdq is 6.769, which illustrates the high variability of ESGdq.

Univariate Test
The univariate test is analyzed separately for the experimental group (companies listed in the heavy pollution industry) and the control group (companies listed in the non-heavy pollution industry) according to whether the sample companies are in the heavy pollution industry.As shown in Table 4, after the implementation of the Guidance, the ESGdq of the experimental group companies increased by 2.151 on average, and the ESGdq of the control group companies increased by 0.296 on average.It can be evidenced that the ESGdq of the experimental group companies was significantly higher than that of the control group companies, and hypothesis H1 was initially verified.

Parallel Trend Test
The DID model validity relies on the parallel trend test.A parallel trend test means that the experimental group and the control group maintain the same or similar trends before the experiment.The DID model can be tested with accurate results only if the parallel assumption is satisfied.Drawing on Hong and Marcin (2010), model (2) was constructed for parallel trend testing.
In model (2), i represents the company, t represents the time, Year represents the year, ID represents the company code, and Control represents the control variable.
As shown in Table 5, in the years after the implementation of the Guidance, i.e., in 2017 and 2018, the coefficients of Treat × Time are significantly positive at the 5% and 1% levels in that order, while in the years before the implementation of the Guidance, the coefficients of Treat × Time are not significant.The reason for the insignificant coefficient of Treat × Time in 2016 is because of the time lag between the implementation and the effect of the policy.The parallel assumptions of the DID model are met, and therefore the estimation of the role of ESGdq of listed companies by the publication of the Guidance is valid.

Baseline results
Table 6 reports the test results of the impact of the publication of the guidance on the ESGdq of listed companies.After considering both time fixed effects and firm fixed effects, Table 6 shows the changes in ESGdq before and after the implementation of the Guidance.Column (1) indicates the results considering only fixed effects, and column (2) shows test results after adding control variables and fixed effects.The results of the full-sample regression showed that the coefficients of Treat × Time were all positive and significant at the 1% level, and the coefficients of Treat × Time showed an increasing trend with the addition of control variables.It shows that the release of the Guidance has improved the ESGdq.From the economic significance perspective, after including control variables and Controlling time and firm fixed effects, the coefficient of ESGdq is 0.946, which means that the implementation of the Guidance has increased ESGdq by 94.6%.

Endogeneity Test
The empirical results show that the ESGdq of listed companies has improved significantly after the implementation of the Guidance, but this result may also be caused by other factors.To accurately identify the causality of the impact of the Guidance on the ESGdq, this paper draws on Khan et al. (2021) and Gholami et al. (2022b) and uses Propensity Score Matching (PSM) to perform one-to-one nearest neighbor matching according to the principles of firm size, financial leverage, and profitability of listed companies in the previous year, and then re-examine them.As shown in Table 7, the coefficients of Treat × Time are all significant, so the main conclusions remain consistent with the above and the hypothesis is still valid.

Placebo Test
The impact of the publication of the Guidance on the ESGdq may be a "false fact", i.e., there is no particular point in time that would lead to an increase in the ESGdq.Following Chen et al. (2015), a placebo test was used to identify the uniqueness of the effect of the Guidance on the ESGdq.Specifically, the point in time when the Guidance was implemented was assumed to be 2013, i.e., 2014 to 2015 were identified as the years after the implementation of the policy, assigned 1, and the remaining years were assigned 0, and then the test was re-run.The test results are shown in Table 8.We can observe that none of the coefficients of Treat × Time is significant, which indicates that there is no effect on the ESGdq after switching the time when the policy is implemented.The placebo test results indicate the uniqueness of the implementation of the Guidance and suggest that the conclusions of this paper are reliable.

Heterogeneous effects of ownership nature on the ESGdq of listed companies
China's economy has a dual ownership structure (Khan et al. 2019), with state-owned enterprises (SOEs) and non-SOEs working together to promote China's economic development.However, due to differences in strategic protection, interest claims and corporate governance models, state-owned listed companies and nonstate-owned listed companies take different measures in environmental protection and social responsibility fulfillment (Zhang et al. 2022).In addition, through the previous analysis, the baseline test finds that the nature of corporate subjects is significant at the 5% level, indicating that the nature of corporations has some influence on the ESGdq of listed companies.Based on legitimacy theory, compared to non-state-owned listed companies, state-owned listed companies are more responsive to policy and will better respond to regulatory calls when faced with green finance policy, which leads to a possible difference in the effectiveness of their ESG disclosure.Therefore, we divide the sample into state-owned and non-state-owned enterprises according to the nature of the ultimate controller.As shown in Table 9, the regression results reveal that the DID coefficients of the SOE and the non-SOE are 0.875 and 0.431, which are significant at the 1% and 5% levels, respectively, considering the control variables, which is consistent with the results of the main hypothesis test.It shows that the green finance policy has a better effect on the quality of ESG disclosure of state-owned listed companies than non-state-owned listed companies.

Heterogeneous effects of local economic development level on the ESGdq of listed companies.
Considering the different levels of economic development in different regions, relevant departments may have different regulatory requirements for ESG disclosure of listed companies.According to the classification standard of the National Bureau of Statistics (NBS) of China (excluding Hong Kong, Macao, and Taiwan), the specific classification of regions is as follows: The eastern region includes 11 provinces (cities) including Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan.These provinces (cities) have good geographical locations and are key areas for national economic development with relatively high levels of economic development.The rest of the region, which is at a lower level of economic development, is the Midwest.According to the influence of different economic development levels on the ESGdq of listed companies, the regression results are shown in Table 10.At the 1% level significance level, the coefficient of the DID is 0.764 for regions with higher economic development and 0.442 for regions with lower economic development, and the coefficients of the DID are positive and significant at the 1% and 5% levels, respectively.The coefficients are more significant in regions with higher levels of economic development, i.e., the impact of the Guidance on the ESGdq of listed companies in regions with higher levels of economic development is more significant.

CONCLUSIONS AND IMPLICATIONS
Based on institutional theory, signaling theory and legitimacy theory, this article uses DID model to investigate the influence of the Guidance jointly issued by the PBC and six other ministries on ESG disclosure of A-share listed companies in the SSE and SZSE from 2014-2018.Unlike Wang et al. (2019), this paper demonstrated the positive correlation between green finance policy and the ESGdq of listed companies.The results show that the release of the Guidance has a positive effect on the ESGdq of listed companies.Empirical evidence also shows that the positive effect of the Guidance on the ESGdq is greater for listed companies in heavily polluting industries, state-owned and in regions with higher levels of economic development.
The main suggestions of this paper are as follows.For regulators, it is necessary to establish a sound regulatory system for ESG disclosure of listed companies and formulate unified ESG disclosure standards; to implement the main responsibility of supervision of regulators and strengthen the synergy of multidepartmental supervision; to introduce norms to improve the quality of ESG disclosure of listed companies in China.For listed companies, the ESG concept should be integrated into company strategy and culture; ESG disclosure quality should be included in corporate management and internal control system.For investors, it is necessary to adapt to the international ESG investment concept, pay attention to ESG information of listed companies, and establish long-termism values.
The possible limitations of this paper are as follows.This paper selects companies listed on the main board of the SSE and SZSE as research subjects, which may not represent the overall ESG disclosure quality of Chinese listed companies.This paper only selects ESG data provided by the Bloomberg database for the study, whether the same results can be obtained from other databases remains to be tested.In the robustness test, only the conventional test of placebo test and propensity score matching method in the DID method is used, and no other methods are used yet.
three dimensions to meet the data needed for ESG research on the quality of disclosure at different levels.

TABLE 1｜
Distribution of sample companies.

TABLE 5｜
Parallel trend test.**, *** indicate significance at the 10%, 5% and 1% levels, respectively, and the values in parentheses below the estimated coefficients are t values.

TABLE 6｜
The impact of the publication of the guidance on the ESGdq of listed companies., **, *** indicate significance at the 10%, 5% and 1% levels, respectively, and the values in parentheses below the estimated coefficients are t values.

TABLE 9｜
Heterogeneity test of property nature.

TABLE 10｜
Heterogeneity test of economic development level., **, *** indicate significance at the 10%, 5% and 1% levels, respectively, and the values in parentheses below the estimated coefficients are t values.