Abstract
This paper explores drivers of corporate water disclosure (CWD) from an aspect of accountability. Based on legitimacy theory and stakeholder theory, we propose six potential drivers of CWD. First, this paper uses an independent sample t-test to analyze differences in CWD among US firms. Later, potential drivers on CWD were identified using ordinal logit regression. These hypotheses posit that debt ratio, blockholders’ ownership ratio, inclusion in a capital market index (i.e., S&P500), and the status of belonging to a water-sensitive industry (WSensi) all have a positive effect on CWD. However, the relations of firm size and profitability on CWD are insignificant. This suggests that the supervision of blockholders and creditors can effectively improve the transparency of CWD.
Highlights
The worst environmental conditions caused by climate change are drought and flood [1]
The objective of this paper is to explore drivers of corporate water disclosure (CWD), which is an important aspect of corporate accountability
Based on legitimacy theory and stakeholder theory, we develop a theoretical framework consisting of six independent potential drivers of CWD
Summary
The worst environmental conditions caused by climate change are drought and flood [1]. While most regions have abundant water resources (e.g., Europe), there are some countries in the world, such as Mozambique, having no access to this basic human right [2]. This environmental phenomenon indicates the worsening of climate change and highlights the importance of water resources. Inadequate water resources management will pose a serious threat to the environment and human health and, in the worst condition, result in the death of all human beings [3] It may affect the operations of a firm and cause business failure [4,5]. The financial impacts of water-related problems totaled more than US$2.5 billion in 2015 [6]
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