The Effects of Environmental Disclosure on Financial Performance in Malaysia

Abstract

Global warming and climate change have been the most challenging environmental problem the world is facing. This problem will affect the future of this planet which can be seen from different stances. The public concern over the problems caused by climate change has led to the emergence of new environmental regulations. Environmental accounting is one of the elements that contribute to the corporate governance. Motivated by the opportunity environmental accounting could achieve the sustainable growth and development, the present study aims to investigate the existences of the environmental disclosure and financial performance among top 100 company of market capitalization in Malaysia for the year 2011. The needed information was examined by content analyzing the companies’ annual report. The analysis shows mixed results between the existence of the environmental disclosure practices in Malaysia and financial performance. This issue is still ongoing debating at international and national level since the environmental accounting is on developing and expanding as the social focus towards environment is increasing. There are no such regulations and statutory requirements for the companies in Malaysia to disclose on the environmental sustainability. However, the need for environmental disclosure is still there if the companies want to legitimize their position among the society to enhance the expectation in measuring the environmental. It is the role of regulators to facilitate provision of such information that need to be disclose by the companies without comprising the need of various parties.