Abstract
The paper examines environmental Disclosure Modelling in a Developing Economy using the Craigg double hurdle model and controlling for the role of corporate governance. This study employs the ex-post research design and investigates firm’s environmental disclosures in Nigeria, by controlling for corporate governance characteristics. The study employs a sample of 35 non-financial firms listed on the Nigerian Stock Exchange using the simple random sampling technique. Secondary data retrieved from the financial statements of the selected companies was used for the study. Both the Tobit and double-hurdle models were estimated but based on the Bayesian and Akaike’s information criteria for model selection, the double-hurdle model is preferred. The result reveals that though Board size is not a significant determinant of probability to disclose environmental information in annual reports (-0.0408, p=0.175), it is a significant determinant of the extent of environmental disclosure reports (0.1943, p=0.00) given that a firm has decided to disclose. Board independence is a significant determinant of both probability to disclose environmental information and extent of disclosure (-2.2373, p=0.00) with a negative coefficient. The Board gender diversity is not a significant determinant of probability to disclose environmental information in annual reports (-0.60076, p=0.461), it is a nevertheless a significant determinant of the extent of environmental disclosure reports (-3.5913, p=0.00) when firms then decide to disclose. Institutional ownership turns out to be a significant determinant of both the probability to disclose environmental information and extent of disclosure (0.0273, p=0.00) when firms choose to disclose. Finally, the truncated model results also reveals that though managerial ownership is not a significant determinant of probability to disclose environmental information in annual reports (-0.01352, p=0.148), it is nevertheless a significant determinant of the extent of environmental disclosure reports (-0.0206, p=0.001) when firms then decide to disclose.
Highlights
Concerns about the environment have grown globally since the last two decades and a lot of attention is being given to the need to ensure environmental sustainability and the roles that various stakeholders can play in this regard
This implies that though board size may not determine if a firm discloses environmental information, it will determine the extent of disclosure given that a firm has decided to disclose
The result of the truncated model reveals that though board size may not determine if a firm discloses environmental information, it will determine the extent of disclosure given that a firm has decided to disclose
Summary
Concerns about the environment have grown globally since the last two decades and a lot of attention is being given to the need to ensure environmental sustainability and the roles that various stakeholders can play in this regard. The second option is where environmental disclosure is modelled as a continuous outcome in which case, the studies will use disclosure check list and content analysis to generate an environmental disclosure score or index In these cases, multiple regressions were taken into perspective (Munene & Guyo, 2013; Anigbogu et al, 2014) and these are generally regarded as one-step approaches. To the best of the investigators knowledge, no none study exist that has extended the Cragg’s Double hurdle regression in modelling environmental disclosures This brings to bear the novelty of this research which stems from the perspectives enumerated above. The rest of this paper is thematically structured as follows: section two deals with the literature review and hypotheses development of the phenomena, which was subjected to empirical investigation, section three dwells on the theoretical framework on which the study was anchored, which is replete with the precedence bothering on diverse views of proponents and scholars on this divide, section four demonstrates the presentation and interpretation of the results, as well as the methodology and model specifications, while section 5 elaborates on the conclusion drawn from diverse perspectives and dimensions of the study
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