Does environmental information disclosure affect corporate cash flow? An analysis by taking media attentions into consideration

Continued conflict flare-up and lingering supply bottlenecks in recent years highlight the importance of corporate risk management. Based on stakeholder theory and legitimacy theory, this study investigates whether Environmental, Social, and Governance (ESG) disclosure, as well as its three pillars, helps hedge against the cash flow risk. Using the data of A-share listed firms in China over the period 2011-2021, our results show that ESG disclosure serves to tame the fluctuations in cash flow, especially in the long run. A one-point increase in the ESG disclosure score lowers the volatility of 1-year and 5-year cash flow rate by 0.014 and 0.020, respectively. In addition, we find that media attention, as an essential intermediary and external supervisor, strongly reverses the positive effect of environmental information disclosure on cash flow risk, while such an effect disappears for social and governance pillars. Further analysis indicates the weak performance of ESG disclosure for SOEs and SMEs.