Two Hundred Eighty Characters of Environment: Relative Environmental Performance, Strategic Communication, and Firm Value

Corporate environmental communication has become an essential aspect of modern business practices, as stakeholders increasingly demand transparency and accountability regarding sustainability efforts. Within this context, we examine whether firms use environmental communication on X/Twitter to offset weaker relative environmental performance and how financial markets value such communication. Combining text mining techniques with econometric analysis, we show that firms with deteriorating relative emission intensity increase their environmental communication, consistent with a legitimacy-seeking strategy. However, our findings highlight that capital markets discount this behavior and instead reward firms whose communication is aligned with improvements in environmental performance.