Environmental information disclosure, political connections and innovation in high-polluting enterprises

Highlights: • EID has a positive impact the innovation of high-polluting enterprises but that political connections weaken the impact. • Political connections weakened the impact of EID on the innovation of state-owned high-polluting enterprises. • EID promotes innovation of high-polluting enterprises in coastal areas but has no impact on those in inland areas. • EID stimulates the innovation in high-polluting enterprises through increases in business income. Using the data on 110 listed high-polluting enterprises in China, this study investigates the impact of environmental information disclosure (EID) on the innovation of high-polluting enterprises. The results indicate that EID has a positive and significant impact the innovation of high-polluting enterprises but that political connections weaken the impact of EID on enterprises' innovation. The results of the grouping tests indicate that EID can promote innovation in both state-owned and non-state owned high-polluting enterprises, and political connections have weakened the impact of EID on enterprises' innovation in SOEs. Results of findings in different regions show that EID significantly promotes innovation in those high-polluting enterprises in coastal areas but has no significant impact on the innovation by high-polluting enterprises in inland regions. In the further mechanism testing, this paper finds that EID stimulates innovation by enterprises through increases in business income.