Culture, Institutional Factors and Differences in Environmental Disclosure Between Canada and the United States

Abstract

We explore the role of cultural and institutional factors in motivating production of mandatory and voluntary disclosure by comparing environmental disclosure produced by Canadian and US companies. We study the years 1988 and 1994 on a matched pairs basis using content analysis of annual reports, security exchange filings (the 10 K in the US and the Annual Information Form in Canada) and environmental reports. Over the time period, the disclosure produced by Canadian firms increased more dramatically than the US disclosure, which was initially greater. This might suggest that Canadian culture and institutional infrastructure is more conducive to the production of environmental disclosure than US counterparts. It would appear that the collectivistic nature of Canadian society has led, in recent years, to the production of a greater level of voluntary environmental disclosure, especially in the environmental report. However, the US, a more litigious society, produces more of the mandated disclosure in the 10 K and annual report.