Corporate governance, external control, and environmental information transparency: Evidence from emerging markets

Abstract

Using a sample of 4195 observations from 19 emerging markets, we investigate how internal corporate governance, external monitoring, and legal and business environment jointly affect a firm’s managerial effectiveness in environmental information transparency in an international setting. The empirical results show that in emerging economies, firms with stronger corporate governance mechanisms tend to adopt an external control strategy in order to mitigate owner-manager agency conflicts. Furthermore, internal corporate governance mechanisms are found to directly increase firm transparency concerning environmental damage and to indirectly do so through external control device. The legal and business environments of countries in which firms operate moderate these relationships.