2.1 Environmental information disclosure and bank credit decision-making
Since 2007, a series of policy documents in China have been issued to encourage financial institutions to carry out green credit. It refers to loans invested in green projects and supporting environmental improvement, which is the main component of green finance in China (Liu et al., 2021). In March 2016, the 13th Five-Year Plan clearly proposed "establishing a green financial system and developing green credit and green securities". As a result, the green financial system has become a national strategy (Luo et al., 2019). In August, the People's Bank of China led seven ministries and commissions to compile and issue the Guiding Opinions on Building a Green Financial System and established the strategy and top-level design of China's green financial system, including the development of green credit and environmental information disclosure. This is the first time that China has systematically put forward the definition of green finance, which has become a programmatic document for the development of green finance.
Green finance refers to investment and financing activities that support environmental improvement, cope with climate change and improve resource utilization efficiency, while the green financial system is an institutional arrangement that guides economic green transformation through bank loans, issuing bonds and stocks, carbon finance and other tools (Wan & Wasiuzzaman, 2021). With the strong support of various policies, China's green finance practice has made some progress, especially the development of green credit and green bonds, which is at the forefront of the world. In 2020, the balance of green loans of 21 major banks in China exceeded RMB 12 trillion, while the total scale of green and ESG loans in major European countries will be approximately RMB 700 billion. With the expansion of scale, green credit has released ecological dividends (Zhu & Lai, 2020). However, in practice, China's financial institutions still lack sufficient enterprise environmental information sharing data, which leads to higher credit risks in credit decision-making.
Stakeholder theory believes that pressure from stakeholders is the main factor that motivates corporate environmental activities (Buysse & Verbeke, 2003; Cooper et al., 2018). Some studies extend this theory and show that companies can also obtain many resources from stakeholders by meeting their needs (Brammer & Millington, 2008; El-Kassar & Singh, 2019). When China implements green credit policy, banks are the most important stakeholders of enterprises because banks not only directly control the source of loan funds but also have the power to issue loans to eco-friendly enterprises. Therefore, companies with more environmental information or a higher degree of eco-friendliness can obtain more financial support from banks. However, since stakeholder theory only provides a broad concept, the influence of external factors and internal factors on stakeholders needs to be further explored. First, we discussed the relationship between environmental information disclosure and bank loans. We believe that the quality of environmental information disclosure and bank loan acquisition can alleviate the problem of information asymmetry. The theory of information asymptoticity believes that the distribution of information between buyers and sellers is unbalanced. A party with more private information can gain benefits in the transaction, but it may harm the interests of its parties (Strausz, 2017). This situation creates the problem of adverse selection; that is, the party with missing information cannot make the correct decision (Akerlof, 1970).
In the financial field, many studies have found that due to information asymmetry, investees face serious capital rationality or higher costs of capital adverse selection (Biais et al., 2015; Dell'ariccia et al., 2017). A better information disclosure policy can increase the level of investor information disclosure and reduce the negative impact of adverse selection (Roychowdhury et al., 2019). Therefore, as an important part of nonfinancial disclosure, environmental disclosure can provide banks with more information related to environmental protection (Cui et al., 2018; Schiemann & Sakhel, 2019). In short, effective environmental information disclosure is an important way for banks to collect more corporate environmental information and make correct credit decisions.
For financial institutions, the information asymmetry between borrowers and lenders is the main reason for the increase in credit risk and the mismatch of funds, especially the high concealment and professionalism of environmental responsibility information, which leads to the aggravation of information asymmetry between enterprises and creditors (Xing, 2021). Creditors will understand the lack of environmental information as an environmental risk, and the value of disclosing environmental information beforehand lies in reducing this "misunderstanding". Based on the theory of information asymmetry, if enterprises do not disclose their environmental information truthfully and completely, it is difficult for financial institutions to correctly assess the environmental risks of green projects. Under this circumstance, it is easy to make adverse choices because of their lack of full awareness of the environmental risks of enterprises, thus increasing the probability of corporate debt default. In contrast, high-quality environmental information disclosure will enable financial institutions to fully understand the performance of the environmental responsibilities of enterprises, reduce the information asymmetry between financial institutions and enterprises, effectively avoid enterprises from missing financing opportunities due to adverse selection, and improve the operability of both parties in the implementation of bank credit decisions (Wang, 2021). In summary, the following assumptions can be put forward:
Environmental information disclosure is positively correlated with bank credit decisions; that is, environmental information disclosure is beneficial for enterprises to obtain more bank credit support.
2.2 Environmental information disclosure and corporate debt financing costs
Under the green credit policy, companies voluntarily improve the quality of environmental information disclosure and actively transmit their positive signals to financial institutions in terms of green innovation, clean production, and environmental governance (Jin et al., 2021). This makes financial institutions have a high degree of recognition of their environmental risks and tend to choose relatively favorable interest rate policies and loose agreement terms in the process of signing bank credit contracts, thereby reducing financing costs (Liu et al., 2020). Under normal circumstances, enterprises that dare to disclose environmental information truly and completely are less likely to hide "bad information" and can usually fulfill their environmental protection and governance responsibilities well, and the probability of moral hazard is low (Fonseka et al., 2019). Based on signal transmission theory, enterprises accurately and fully disclose their green governance and environmental responsibility performance (Eichholtz et al., 2019). They send a more positive signal to external stakeholders so that creditors can demand a lower risk premium and tend to formulate relatively favorable interest rate policies and loose agreement terms in the process of bank credit decision-making, thus reducing the debt financing cost of enterprises (Li et al., 2019).
Better corporate social responsibility helps companies establish more stable relationships with consumers, employees, and operators, thereby reducing business risks and bankruptcy risks (Brooks & Oikonomou, 2018). Creditors demand lower debt interest on companies with better social responsibilities. Relevant studies have shown that when other conditions are the same, corporate social responsibility and loan interest rates are negatively correlated (Wu & Shen, 2013; Rosa et al., 2018); a reduction in capital costs will also affect or restrict the motivation, level and quality of corporate social responsibility information disclosure (Meng, 2010). In terms of environmental information disclosure, there is a serious information asymmetry problem between listed companies and stakeholders, and information asymmetry can easily lead to adverse selection by creditors.
The higher the degree of information asymmetry, the higher the risk premium required by creditors, and the higher the cost of corporate debt financing. Signal transmission theory is fundamentally concerned with reducing the information asymmetry between the two parties (Spence, 2002; Bergh et al., 2014). Insiders receive positive and negative private information, and they must decide whether to communicate this information to outsiders. Signal transmission theory mainly focuses on the deliberate dissemination of positive information in an effort to convey the attributes of part-of-speech organization (Certo, 2003; Connelly et al., 2011). Franco et al. (2015) found that compared with disclosing low-quality segment information, diversified companies have lower debt financing costs when disclosing high-quality segment information. Banks mainly rely on informal channels to reduce information asymmetry, thereby reducing public disclosure costs (Alvis, 2013).
Companies that disclose environmental information can obtain high bank loans at relatively low debt financing costs (De'jean & Martinez, 2009). The "green credit" economic policy proposed by the Ministry of Environmental Protection of China encourages creditors to fully evaluate and review the company's environmental information before making a lending decision. If the company does not disclose environmental information or the quality of information disclosure is low, it will produce adverse selection by creditors, making it impossible for the company to implement green economic policies. If the company discloses high-quality environmental information, the needs of creditors will be met, and their cost of finding information will be reduced. Therefore, debt financing is easier for the company. In the absence of environmental problems, companies will naturally improve the quality of environmental information disclosure to maintain their existing reputation and obtain lower loan interest rates.
Stakeholder theory also provides a reasonable explanation for the intrinsic motivation of enterprises to obtain more favorable credit support by disclosing environmental information. Under the background that China's environmental governance issues have attracted much attention, external information users require enterprises to provide relevant information, such as the performance of environmental governance responsibilities, environmental performance and economic consequences, to help them accurately assess the environmental risks of enterprises and make scientific and reasonable investment and management decisions accordingly.
Under the pressure of external stakeholders and strict resource constraints, enterprises improve resource utilization efficiency and reduce energy consumption through green innovation, which brings good external reputation to enterprises. For example, the disclosure of environmental management system certification information by enterprises can reflect the importance of environmental protection, help enterprises win the trust of various stakeholders, and create a good external environment for enterprise financing (Zhang et al., 2019). When making bank credit decisions, financial institutions as stakeholders analyze their potential environmental risks according to the quality of enterprise environmental information disclosure and take environmental impact as an important basis for bank credit decision-making to reduce the debt financing cost of green enterprises and increase the debt financing cost of "two high" enterprises. In summary, the following assumptions can be put forward:
Environmental information disclosure is negatively correlated with debt financing costs; that is, environmental information disclosure is beneficial to reduce debt financing costs.