The Impact of Climate Risk Disclosure on Real Earnings Management: Examining Corporate Transparency and Earnings Quality in the Context of Environmental Accountability

This study explores the relationship between climate risk disclosure (CRD) and real earnings management (REM) in Chinese A-share listed companies from 2009 to 2022. Using a sample of 31,953 firm-year observations, we find that higher levels of climate risk disclosure are associated with reduced earnings manipulation, supporting the notion that increased transparency discourages opportunistic financial behavior. However, the impact of CRD on REM varies depending on the type of climate risk disclosed. Firms disclosing acute risks are more likely to engage in earnings manipulation to offset immediate financial disruptions, while those disclosing transitional risks tend to show more transparent financial reporting. Additionally, we highlight the moderating effect of financial analyst coverage on the CRD-REM relationship, with high analyst coverage reducing the likelihood of earnings manipulation. The study provides significant implications for policymakers, investors, and regulators, while also identifying limitations and areas for future research.