Using China's corporate environmental disclosure
policies and a dynamic incomplete information model, this study examines how
listed companies' environmental disclosure signals fund investments. Results
show that such disclosure positively signals fund investments, with the effect
strengthening alongside rising market attention. Mechanism analyses indicate
environmental disclosure signals corporate quality to consumers, enhancing
sales and profits. Fund managers recognize this mechanism, directing investments
that improve fund performance. This research confirms environmental disclosure
as a positive market signal, offering insights for understanding disclosure
motivations and mitigating information asymmetry.
