A study on the short-term and long-term corporate responses to the GreenWatch Program: evidence from Jiangsu, China

The GreenWatch Program in China was established to enhance corporate responsibility for pollution control through the public disclosure of firms’ environmental performance. There is, however, limited research about this program. In this study, we analyzed the differences in the responses, both from short-term and long-term perspectives, of the 497 target firms in Jiangsu Province that continuously participated in the program for five years. The results revealed that firms with poorer initial performances than other firms were more inclined to improve their ratings and that their responsiveness was enhanced over time. Wholly foreign-owned firms showed a higher probability of improving their rating results, even with better initial ratings from both the short-term and long-term perspectives. Firms located in areas with higher population densities had a short-term positive influence on improving rating results. In addition, firms belonging to the two main polluting industries (i.e., textile and chemical) had a significant negative influence on changes to ratings from both the short and long-term perspectives, which implied the influence of discharge standards improvement on the firms’ rating results. Finally, the overall improvement in ratings during the study period was not caused by improvements made by target firms with long-term records but by newly participating firms with better performance, from both the short-term and long-term perspectives.