Does More Voluntary “Green” Information Disclosure Cut Down the Cost of Equity: Heavy Pollution Industries in China

Focusing on the unique background of the coexistence of mandatory and voluntary disclosure of 19 environmental information by domestic companies in heavy pollution industries for which is lost 20 sight of in the existing literature. The purpose of this paper is to identify, under the premise of 21 compulsory disclosure of environmental information in the financial report and separate 22 environmental report, whether the further voluntary environmental information disclosure in the 23 corporate social responsibility (CSR_E) captures the discount from investors during equity 24 financing. Employing the sample of 4390 China’s A-share listed companies in the heavy pollution 25 industries between 2010 and 2018, we adopt Python to conduct texture analysis and image 26 recognition, applying the fixed effect regression model to text hypothesizes, within the robust 27 analysis, our empirical results show that the CSR disclosure, higher quality of CSR reports, greater 28 extent of CSR_E disclosure including accurate environmental investment information as well as the 29 amount of graphs and texts all have the positive impact on the cost reduction of equity financing. 30 Moreover, the degree of CSR_E disclosure in reducing cost of equity is 30 times that of CSR 31 disclosure, which indicates that voluntary disclosure of environmental information is better to get 32 extra discount of equity financing by satisfying favor of investors instead of keep silent on the basis 33 of compulsory disclosure of environmental information. In addition, the charts have specific 34 positive effects that’s not available for the text, the accurate quantitative environmental information creates more values for those enterprises disclosed. This study offers guidelines for regulatory 36 authorities to explore the coordination effect of mandatory and voluntary disclosure policies, and 37 achieve environmental governance and sustainable development of enterprises by improving their 38 corporate governance.


Introduction
Hypothesis 2. For EHPIs that disclose CSR reports, the higher the quality of their disclosure, the 245 lower the CE they can obtain. 246

CSR_E disclosure and CE 247
The CSR_E disclosure of EHPIs has attracted the attention of investors in the process of equity 248 financing. The content of CSR reports is complex and the corresponding social responsibility 249 management system is huge, making it difficult for investors to make an overall assessment of the 250 quality of CSR reports from a professional perspective. For EHPIs, environmental information that 251 is highly related to their industries and operation activities is easier to understand by investors and 252 as the basis for decision-making (Zheng et al., 2020). Since environmental information is an 253 important part of the CSR report, especially for EHPIs, directly related to the dominant business of 254 the company. This type of information has accumulative characteristics, which implicitly reflects 255 the future development of the company's operation activities and the level of renovation and 256 improvement. A higher degree of CSR_E disclosure is related to stable and sound long-term 257 business amassing. Compared with occasional and sudden responsibility information on social 258 welfare activities such as donations (Kim and Ji, 2021), CSR_E is more reliable and authentic on 259 the premise of mandatory disclosure of environmental information for EHPIs, which is also the most 260 relevant information for investigating the development potential of the company in the industry. In 261 view of the accumulation and authenticity of CSR_E, it has become a key focus area for investors 262 and enterprises in the equity financing negotiation process. Therefore, when a company is willing 263 to disclose more CSR_E information, it is generally considered that, the operating risk is lower in 264 the future development of the industry (Kuo et al., 2021), and the relative equity financing risk that 265 needs to be compensated is also smaller, and then it is lower for the CE of the company. 266 The accuracy of environmental investment in the CSR_E has supposed to be a key factor for 267 investors to weigh financing costs. As a kind of non-financial information, the active disclosure of 268 CSR_E sends a positive signal to investors in the capital market (Nishitani et al., 2020). However, 269 CSR is still a new thing in China. CSR reports and the environmental information in them have not 270 yet formed a more unified disclosure format and content system. Because each industry owns 271 different specialties for EHPIs, and enterprises have more flexibility about how they disclose 272 CSR_E, the difficulty for investors to identify and interpret CSR_E information is aggravated. 273 Reducing the amount of uncertainty information disclosure, that is augmenting exact quantitative 274 information, can significantly reduce the CE through lessening the investment risk. Thus, such 275 accurate environmental information or qualitative information instead of qualitative information, 276 for instance, the amount of environmental investment, can be quickly grasped and understood by 277 investors, The example of accurate and vague information disclosure in CSR_E is following: Such information is the effective information for investors' decision-making for its relieving the 285 difficulty of information interpretation (Blankespoor et al., 2020), that is to say the cost of 286 information integration could be reduced. So far, enterprises can obtain additional discounts on CE 287 given by investors by means of improving the effectiveness and utilization of disclosed information. 288 This leads to our third hypothesis: 289 Hypothesis 3a. The higher level of environmental investment disclosure in the CSR_E, the lower 290 FC EHPIs will acquire. 291 The multiple styles of CSR_E disclosure further affect the pricing level of equity financing provided 292 by investors for enterprises (Kalkanci and Plambeck, 2020). Since normative documents of China's 293 CSR report disclosure are more of a principled requirement on the content and scope of disclosure, 294 such as(the "Notice on Strengthening the Social Responsibility Commitment of Listed Companies" 295 and the "Guideline of Environmental Information Disclosure for Listed Companies" submitted by 296 Shanghai Stock Exchange (2008), this provides enterprises greater flexibility and independent space 297 for the CSR_E disclosure. And the emphases on the strict environmental regulations and penalties 298 for EHPIs in China have made enterprises more cautious in the disclosure of environmental 299 information. Therefore, a company with better environmental governance is willing to add different 300 styles of information disclosure, such as charts, to increase its publicity and expression (Du and Yu, 301 2021), and directly to convey the signal to investors that the operation situation is further improving 302 and gains its momentum by expanding the length of disclosure (Haffar and Searcy, 2018). 303 Although environmental information has been disclosed in their mandatorily documents for EHPIs, 304 most of this information are text and data. The differences of the disclosure manners, including 305 length of texts and charts, in CSR_E will further affect investors' attention and consideration. Based 306 on reputation theory, the better performance of environmental responsibility thought to be the good 307 reputation can satisfy investors' psychological needs for confidence in the company, attract more 308 investors' attention, and increase trust and faith in the company. It not only obtains more high-309 quality investment opportunities for enterprises, but also reduces the cost of uncertain risks for 310 investors to bear, reducing the uncertainty of investment ultimately, and enterprises can fight for a 311 lower CE for themselves in the meantime. Hence, the fourth hypothesis is formulated as follows: 312 Hypothesis 3b. The richer the CSR_E disclosure manners, that is length of contents and charts, the 313 lower the CE that EHPIs will capture. 314 Combining with the research samples, we collect various data required for the calculation of the CE 341 and the original text of the EHPIs' CSR report from the Wind database, and then, based on the 342 Python text analysis technology, gather the number of charts and pages of CSR_E and 343 environmental investment information that is further identified with the disclosure degree and 344 divided into three types: whether to disclose, accurate disclosure or vague disclosure. Moreover, the 345 quality of CSR disclosure is measured by the rating information of China's third-party authoritative 346 evaluation agency (www.hexun.com), and other remaining data required for the study comes from 347 Wind and CSMAR database. 348 Besides, consideration the extreme value influence, ST enterprises and the samples of enterprises 349 that have been delisted from the 2010-2017 period is excluded, as well as the samples with missing 350 data. Therefore, the final sample size is 4390 listed enterprises incorporated. 351

Variable measures 352
We discuss the construction of the main variables of interest in detail below, and in the Table 1 where for firm i in year t, ( , ) is a continuous variable that reflects theCE of EHPIs; , +1 365 is the estimated earnings per share for the period of t+1; , is the estimated earnings per share 366 for the period of t; 0( , ) represents the stock price per share. 367 Independent variables:

368
CSR disclosure The CSR disclosure (CSR_d) is the binary variable, in the form of "yes/no" disclosure, 369 indicating whether EHPIs separately disclose CSR reports. We code 1 if the company discloses a 370 CSR report, otherwise it is 0. 371 CSR disclosure quality (CSR_q) We use an official rating data from Hexun to capture the score of CSR 372 disclosure to evaluate its quality with the hundred-mark system. Its social responsibility professional 373 evaluation system examines five aspects: shareholder responsibility, employee responsibility, 374 supplier, customer and consumer rights and interests, environmental responsibility and social 375 responsibility, and each has been set up secondary and tertiary indicators. Each items score is 376 summed to conduct a comprehensive evaluation of social responsibility . The 377 quality of corporate CSR disclosure is quantified based on the total points obtained from the 378 evaluation. The higher the score, the better the quality of CSR disclosure. 379 Degree of environmental investment disclosure (CSR_E1) Python text analysis technology is taken to identify 380 and collect the environmental investment disclosure types, and we measure environmental 381 investment disclosure degree with points approach. The sample enterprises that disclose CSR 382 reports are divided into enterprises that disclose and undisclosed environmental investment 383 information, and then the enterprises that disclose environmental investment information are further 384 divided into accurate disclosure of environmental investment amount and vague disclosure (or 385 partial disclosure) of environmental investment amount Then the positive value of environmental 386 investment disclosure degree indicates a discrepancy among accurate disclosed, vague disclosed 387 and undisclosed of environmental investment amount successively by variable assignment. This is 388 the method to investigate the characteristics of corporate information disclosure from the 389 perspective of text maneuverability (Naughton et al., 2019). 390 Richness of CSR_E disclosure (CSR_E2) CSR_E disclosure richness is measured by the textural analysis with 391 Python by counting the number of charts and pages (Cong L W 2019). On the one hand, chart is one 392 of the principal features which distinguish the environmental information from CSR reports mainly 393 adopted text and charts and other reports in which enterprises mandatorily disclose their 394 environmental information mainly adopted text and data tables, we then calculate the number of 395 charts appeared in the part of CSR_E to examine the effectiveness of CSR_E that environmental 396 information does not possess in financial reports or others. On the other hand, the length of CSR_E 397 indirectly signifies the enthusiasm of voluntary disclosure (Basu and Palazzo, 2008), so we take 398 follow way of pages to compute the length. The length of CSR_E is calculated as half a page if the 399 number of pages is less than half a page, and calculated as one page if there are more than half but 400 less than one page, subtracting the pages that charts occupied to get the total pages amount, and we 401 get the length of CSR_E within the natural logarithm calculated based on the final number of 402 statistical pages plus one. Both of above methods measure the richness of the form and content for 403  (Table 1). 409

Model design 410
Research design for H1 Based on H1, there is only one situation between disclosure and non-disclosure 411 of the company's disclosure of CSR. If a company discloses a CSR report, it will not be able to 412 learn the characteristics of its non-disclosure of the CSR. In consideration of the impossible to 413 observe the disclosure and non-disclosure of CSR simultaneously, the two reported situations are 414 likely to cause the sample selection bias or self-selection, for which the Propensity matching score 415 (PSM) method is taken to construct the regression model of H1. 416 First of all, it is divided into the experimental group (disclosed CSR report sample) and control 417 group (undisclosed CSR report sample) according to the research sample. Secondly, propensity 418 score matching performed based on the following three steps: 419 The first step is to calculate the propensity score (PS) of the experimental group and the control 422 group within logistic and probit regression, and obtain the PS of the two groups of observations: 423 Where is the variable that affects the disclosure of the CSR report, is a dichotomous variable, 425 if the CSR report is disclosed, equals 1, and 0 otherwise. 426 The second step is to match the experimental group (=1) and the control group (=0) according to 427 the PS. Due to the various matching methods, such as the nearest neighbor matching of the direct 428 method, the weighted average radius matching, and the kernel matching with a wide coverage, 429 drawing on the existing research, the kernel matching method is selected (Luo et al., 2019). 430 The third step is to estimate the average treatment effect (ATT) of enterprises that choose to disclose 431 CSR reports: 432 Finally, a regression model (Model 1) is built combined with the testing needs of H1, 437 , +1 = 0 + 1 _ , + 2 , + 3 4 , + 4 , + 5 , + 6 ℎ , + 439 7 , + 8 , + 9 ℎ , + 10 , + 11 , + 12 , + 440 Where, _ , is the main research variable, the coefficient of this variable 1 indicates the 442 impact of choosing to disclose the CSR on the CE. According to the above analysis, the forecast is 443

negative. 444
Research design for H2 Aiming at H2, the regression model (Model 2) is constructed in this paper: 445 Where, _ , is a research variable, and the coefficient of this variable 1 represents the 450 impact of CSR report disclosure quality on the CE. According to the above analysis, the forecast is 451

2): 454
Model 3-1: 455 , +1 = 0 + 1 _ , + 2 , + 3 4 , + 4 , + 5 , + 456 6 ℎ , + 7 , + 8 , + 9 ℎ , + 10 , + 11 , + 457 12 , + ∑ , + ∑ , + , (7) 458 Where, _ , is the research variable, and the coefficient of this variable 1 indicates the 459 impact of the degree of environmental investment disclosure on the CE. According to the above 460 analysis, the forecast is negative. 461  In short, the level of voluntary CSR disclosure by EHPIs is not commonplace enough, as well as its 497 quality difference is distinctive, enterprises with higher quality of CSR disclosure tend to use more 498 charts and texts in CSR_E. In other words, enterprises with a strong willingness to chart are also 499 willing to cooperate with more textual CSR_E information to convey the enthusiasm of 500 environmental responsibility. 501 502  Table 2 presents descriptive statistics of the variables used in the regression analysis, CSR_Eric 12 is the multiplicative interaction item between CSR_Eric1 and CSR_Eric2.

504
Correlation analysis

505
Correlation analysis of the research variables (Table 3) is conducted to provide greater insight into 506 the CSR, especially CSR_E disclosure texture characteristics for EHPIs based on the descriptive 507 statistical analysis and research designed models. Firstly, as well as generally, the possibility of 508 multicollinearity in the models built in this paper is eliminated in the light of the absolute value of 509 the Pearson correlation coefficient between research variables less than 0.7 combined with the VIF 510 tests. Secondly and concretely, the Pearson correlation coefficient between CSR disclosure and CE 511 is 0.0355 at a significant level of 5% (Panel A), from which the significant positive correlation 512 between these two variables is concluded intuitively, however, the positive correlation results 513 obtained in this part cannot directly prove that CSR disclosure of corresponds to higher CE 514 considering that CSR_d is a dummy variable while its' median and he lower quartile is 0 and 1 515 respectively shown in Table 2. The similarity also includes the correlation coefficient between 516 environmental investment disclosure in CSR_E (CSR_Einv) and CE, the positive correlation, 517 although a significant correlation exists, that found in the results (Panel C) cannot be used as the 518 final conclusion (the Pearson correlation coefficient is 0.0267 with 1% significant level). Among 519 the remaining research variables, the quality of CSR disclosure (the Pearson correlation coefficient 520 is -0.0913 with 1% significant level), the length of CSR_E disclosure (the Pearson correlation is -521 0.04 with 10% significant level), and the amount of chart usage (the Pearson correlation coefficient 522 is -0.0511 with 10% significant level) and CE presents an obvious negative correlation, it is initially 523 verified the significant correlation among the CSR disclosure of EHPIs, the degree of CSR_E 524 disclosure richness and the cost of equity in the light of the results of the above-mentioned 525 correlation analysis. 526

527
Combined with the built regression models, this study the hypothesis that proposed in the research 528 are further tested after conducting statistical description analysis and correlation analysis. 529 Test for H1: CSR disclosure of EHPIs The column (1) in Panel A of Table 4 shows the regression 530 result of the test for H1. The regression coefficient of the CSR disclosure (CSR_d) to the CE is 531 significantly negative at the 1% level ( =-0.0035), and it means EHPIs that disclose CSR reports 532 are more likely to obtain lower CE compared with the companies undisclosed CSR. The regression 533 coefficient is -0.0035, indicating that a company can reduce 0.35% CE by disclosing CSR reports. 534 This regression result support the prediction of H1 and suggest that, on the one hand, companies' 535 voluntary disclosure of CSR reports could make for the investor uncertainty reduction via receding 536 information asymmetry in the capital market, and therefore indirectly increasing stock liquidity, for 537 which ultimately investors acquire venture deals at a lower price while they are willing to provide 538 corporate with discount on the CE. Further notice, the regression result of liquidity on CE ( =-539 0.0002, p<0.05) confirmed above inference of H1, which means the increase in liquidity can help 540 reduce CE. On the other hand, besides for that EHPIs disclose environmental information related to 541 their industries and primary business in the financial report and other reports accordance with 542 mandatory disclosure requirements, enterprises' willingness to disclose extra CSR reports separately 543 indicates that a majority of companies prefer to disclose CSR to a certain extent to provide investors 544 with supplementary expanation of other reports information. Text materials for further 545 supplementation and verification of environmental information are sufficient to convey positive 546 signals of corporate operation and social responsibility (especially environmental responsibility) to 547 investors in the annual report, which in turn helps to lower investors' requirements for the minimum 548 expected return. In this regard, the enterprise can reduce the cost during equity financing. In addition 549 to the compulsory disclosure of environmental information, active disclosure of CSR reports can 550 also help EHPIs themselves win the support of responsible investors and obtain additional equity 551 financing compensation from responsible investors. 552 Test for H2: CSR disclosure quality of EHPIs For EHPIs that disclose CSR reports, the quality 553 of disclosure has further become the classification standard in the capital market. In order to further 554 examine the impact of the quality of CSR disclosure by EHPIs on the CE, Table 4 resents the result 555 associated with model 2 to test H2 (the column (2) of Table 4). The regression coefficient of CSR 556 disclosure quality to the CE is significantly negative at the level of 5% (β=-0.0002), indicating that 557 higher-quality CSR disclosure companies can reduce investors' trade friction to a certain extent, and 558 the transaction costs are controlled efficiently achieving the lower CE. Meanwhile, the regression 559 coefficient of operating risk (OR) to CE is significantly positive (β=0.0095, p<0.01), based on which 560 it is partially inferred that high-quality CSR disclosure helps companies to promote publicity of 561 harmonious social ties with their stakeholders to investors and maintain mutually beneficial 562 relationships. Facing the future uncertainty risk, companies can better play the role of common 563 governance and reflect stronger risk response capabilities. Moreover, the consequent risk decreasing 564 for investors can ensure enterprises a greater equity financing discount, hereby the CE will be also 565 lowered, which verifies H2. 566 Test for H3a: environmental investment disclosure of CSR_E In response to the mandatory 567 requirements for EHPIs to disclose environmental information in annual reports, we then focus on 568 the impact of major component for companies' voluntary disclosure of CSR_E, environmental 569 investment disclosure, on the CE (the columns (3) of Table 4). According to the regression results, 570 the impact of environmental investment disclosure degree on CE is significantly negative at the 1% 571 level (γ=-0.0017, p<0.01). suggesting that companies voluntarily disclosed environmental 572 investment have a lower CE than companies that do not disclose. Besides, companies that disclose 573 precise data of environmental investments enjoy lower CE compared with the companies that make 574 vague disclosures, thus supported H3a. It correspondingly facilitates us to figure out that companies' 575 disclosure of accurate quantification of CSR_E can bring greater information value realizing value 576 appreciation following to the compulsory disclosure requirement of environmental information for 577 EHPIs. Correspondingly, the precise quantitative information obtained by capital market investors 578 is beneficial to reduce the information processing costs of trade decisions and increase investors' 579 willingness to invest. 580 Test for H3b: the richness of CSR_E disclosure In addition to the quantitative information for 581 disclosure, the CSR_E that EHPIs voluntary disclosure includes the use of charts and length of text, 582 the column (4)-(6) in Panel B of Table 4 are the regression results of the richness of CSR_E 583 disclosure on the CE. 584 Firstly, the regression result of the graph exploit on the CE in column (4) is distinctly negative (δ= 585 -0.0004, p<0.1), indicating that positive effects for enterprises to reduce CE is created by the using 586 of graphs in CSR_E of EHPIs. Specifically, against the context of mandatory disclosure of 587 environmental information in annual reports, EHPIs actively adopt charts to further disclose 588 environmental responsibility information in CSR report, showing that companies are actively 589 performing environmental responsibilities and attempt to deliver with diversified announcement 590 forms which are recognized by investors. Then, the recognition of investors, including better 591 positive reviews on operation, especially the long-term evaluation of corporate sustainable 592 development, can better explain the reasons why companies obtain lower-cost equity financing from 593 capital market. In addition, the results also indirectly manifest that the chart is a better way for 594 companies to disclose external information. 595  ***, **, * indicate statistical significance at the 1 percent, 5 percent and 10 percent levels, respectively. Table 3 displays the Pearson correlation analysis results based on the H1, H2, H3a and H3b successively.
Secondly, in the column (5) of Table 4, the regression of the length of CSR_E disclosure on the CE 596 yielded results similar to the graph above, showing a brightly negative impact (δ= -0.0037, p<0.05). 597 In other words, the greater number of pages of CSR_E disclosure, the lower CE company 598 accomplished. H3b is proved. It also follows that, if EHPIs are willing to invest more energy and 599 cost to disclose CSR_E information related to its operation, the company will earnestly fulfill its 600 environmental responsibilities and convey a positive signal for operation. From this perspective, the 601 cost of company information disclosure can be compensated by saving CE. So, in other words, 602 enterprises would like to obtain lower-cost of equity financing through a higher degree of CSR_E 603 disclosure. For another, investors prefer EHPIs to disclose more environmental information in their 604 CSR reports. That means, it is better for companies to disclose the abundant environmental 605 information. Compared with the standpoint that companies talk more and cause investors to find 606 more problems, the more CSR_E disclosure will gain higher positive evaluation from investors. 607 Ulteriorly, the disclosure of CSR_E does not exist alone in the form of charts, the use of charts is 608 more embedded in the text information. Then, the interaction impact of the chart and pages of 609 CSR_E on the CE is further examined. The results show that (column (6) of in ***, **, * indicate statistical significance at the 1 percent, 5 percent and 10 percent levels, respectively, t-statistics are reported in parentheses below the coefficient estimates. Year and industry fixed effects are added to the model. All continuous variables are winsorized at the 1 percent level. Table 4 displays the test results of the relation between CSR disclosure, quality of CSR report, environmental investment disclosure, richness of CSR_E disclosure and cost of equity respectively from column (1) to column (6). The propensity matching score (PSM) is adopted to test the relation between CSR disclosure and cost of equity to avoid self-selection. CSR_Eric 12 is the multiplicative interaction item between CSR_Eric1 and CSR_Eric2.

655
Reclassification of environmental investment disclosure

656
By reclassified the environmental investment disclosure into two categories, the robustness of the 657 regression results above is tested again. Integrating the precise disclosure and fuzzy disclosure of 658 environmental investment amount into the environmental investment disclosure which is assigned 659 1 while 0 for companies that do not disclose environmental investment amount. Then, the disclosure 660 of environmental investment of EHPIs (Total2) was re-measured. Based on the CE obtained by 661 using the PEG model in the earlier, the MPEG and OJM models are also included, and regression 662 analysis is performed respectively. The results are shown in In the test of H3b, the abundance of CSR_E disclosure was measured by the number of pages and 672 graphs, Considering the difference in length of CSR_E caused by the font size of each CSR report, 673 we further employ the number of characters of CSR_E counted with Python, substituting textual 674 length, to repeat the previous regression analysis. From the results in Table 7, the number of 675 characters and graphs in CSR_E of EHPIs has a significant negative impact on the CE (β=-0.0001, 676 p<0.05). To summarize, the more characters and graphs used in CSR_E, the lower the CE a company 677 undertake. Therefore, H3b is proved to ensure the robust of the results. period of the empirical test is changed, the result is steady. In yet other words, the CSR disclosure, 685 quality of CSR disclosure and the richness of CSR_E disclosure of EHPIs all make significant 686 negative impacts on the CE. As a result, H1, H2, and H3b have been verified again. 687 688 ***, **, * indicate statistical significance at the 1 percent, 5 percent and 10 percent levels, respectively, tstatistics are reported in parentheses below the coefficient estimates. Year and industry fixed effects are added to the model. All continuous variables are winsorized at the 1 percent level. Table 8 displays the robust test results of the relation between CSR disclosure, quality of CSR report, richness of CSR_E disclosure and cost of equity respectively from column (1) to column (5) by extending periods from 2017 to 2018. The propensity matching score (PSM) is adopted to test the relation between CSR disclosure and cost of equity to avoid self-selection. CSR_Eric 12 is the multiplicative interaction item between CSR_Eric1 and CSR_Eric2.

Additional analysis 694
It is proved above that the CSR disclosure of EHPIs, especially the CSR_E disclosure, make 695 dramatical inhibiting effect on the CE. Thus, we further examine whether the same effect of this 696 type of information disclosure exists on the cost of debt for EHPIs. On these grounds, the cost of 697 debt financing (DebtCost1 and DebtCost2) is calculated in terms of two approaches (Ahmed et al., 698 2002;Zhou et al., 2016), the regression analysis based on the hypotheses put forward above is in 699 Table 9. It is found that the higher the quality of CSR disclosure and abundance of CSR_E disclosure, financing from CSR disclosure and the CSR_E disclosure, are 0.1 percent and 2.16 percent greater 707 obvious than that of the CE respectively. The results indirectly indicate that the CSR disclosure of 708 EHPIs and the CSR_E therein will not decrease one type of financing cost at the expense of another 709 type of the cost increasing. In other words, the voluntary disclosure of this type of information and 710 its' disclosure characteristic has purely positive effects on the financing cost decreasing (equity 711 financing and debt financing) while no substitution or hedging between different financing markets 712 been found. 713 ***, **, * indicate statistical significance at the 1 percent, 5 percent and 10 percent levels, 719 respectively, t-statistics are reported in parentheses below the coefficient estimates. Year and 720 industry fixed effects are added to the model. All continuous variables are winsorized at the 1 percent 721 level. 722 Table 8 displays the additional test results of the relation between CSR disclosure, quality of CSR 723 report, environmental investment disclosure, richness of CSR_E disclosure and cost of debt with 724 two measurements respectively from column (1) to column (6). The propensity matching score 725 (PSM) is adopted to test the relation between CSR disclosure and cost of equity to avoid self-726 selection. CSR_Eric 12 is the multiplicative interaction item between CSR_Eric1 and CSR_Eric2. 727

728
It is trapped in the strongly connection between the main operation of EHPIs and environment 729 deterioration, companies in these types of industries have been required to disclose environmental 730 information in different reports since 2010. However, these companies have also carried out 731 voluntary disclosure of CSR reports, especially CSR_E disclosed in the report is more plentitude 732 and abundant. We exploit the motivation for voluntary disclosure of CSR and CSR_E by EHPIs 733 from the perspective of equity financing. That is, in addition to disclosing mandatory environmental 734 information in annual reports, companies also disclose CSR and improve its disclosure quality, 735 provide more quantitative information and increase the length of CSR_E disclosure by combining 736 more charts to obtain lower-cost equity financing. Specifically: 737