Impression Management Through Climate Disclosure: The Role of Sustainability Performance Feedback

Climate disclosure is a key channel through which stakeholders evaluate firms' climate governance initiatives and sustainability performance. However, few studies have examined how firms adjust their climate disclosure strategies in response to relative sustainability performance. Drawing on performance feedback theory, we examine how sustainability performance feedback shapes the visibility and readability of climate disclosure. Using a sample of Chinese A‐share listed firms in eight energy‐intensive industries from 2009 to 2023, we employ OLS regression to test the proposed relationships. Our findings indicate that positive sustainability performance feedback is associated with greater disclosure visibility but lower textual readability. In contrast, negative sustainability performance feedback is associated with lower visibility but higher readability. These effects are more significant in firms with higher institutional ownership, stronger industry competition, and superior internal control quality. The findings suggest that firms may strategically adjust the presentation and textual complexity of climate disclosure in response to sustainability performance feedback. This study contributes to the literature on the economic consequences of corporate performance feedback and the determinants of climate disclosure strategies. It also offers practical implications for investor decision‐making and the improvement of corporate climate governance and disclosure practices.