Green Signals or Red Flags? The Impact of Greenhouse Gas Disclosure on Product Market Threats Under Political Risk

Abstract

Despite the growing emphasis on corporate climate transparency, the strategic implications of greenhouse gas emission disclosure (GHGD) for product market threats remain underexplored. This study develops a theoretical model proposing that GHGD influences the level of competitive threat firms face, with the effect moderated by firms' broader political environments. Specifically, we argue that political risk strengthens the protective role of GHGD by amplifying the value of credible environmental transparency in volatile institutional contexts. Drawing on a panel dataset of 19,990 firm-year observations from 1606 firms between 2006 and 2022, we apply a comprehensive set of robust estimation techniques to empirically evaluate these relationships. The results provide strong support for both the main effect of GHGD and the moderating role of political risk. These findings contribute to the literatures on sustainability, strategic CSR, and strategic management by offering new insights into how environmental disclosure interacts with political risk and shapes firms' competitive positioning, underscoring the need for a more context-sensitive approach to sustainability strategy in complex institutional environments.