Climate Policy Uncertainty and Corporate Disclosure Strategies: Evidence From Financial Statement Comparability

This study explores how climate policy uncertainty (CPU) impacts corporate financial reporting strategies. We employ a news‐based CPU measure using bidirectional encoder representations from transformers (BERT), an advanced deep learning model known for its sophisticated natural language processing capabilities. Based on a sample of Chinese listed companies from 2010 to 2023, we find a negative relationship between CPU and financial statement comparability. This effect is more pronounced in firms with high pollution levels or significant environmental costs. Our mechanism tests reveal that CPU leads to more abnormal transactions and discretionary reporting, which further reduces comparability. Additionally, CPU significantly affects discretionary accounting comparability and diminishes the textual comparability of MD&A and accounting policy disclosures. Overall, our findings indicate that higher levels of CPU are associated with a greater likelihood of unusual corporate behaviors and strategic reporting decisions, resulting in decreased financial statement comparability.