Abstract
This study reexamines the relationship between the quality of a firm’s voluntary environmental disclosures and firm value by exploring the relationship between the components of firm value (expected future cash flows and cost of equity) and voluntary environmental disclosure quality. We measure voluntary environmental disclosure quality using a disclosure index consistent with the Global Reporting Initiative (GRI, 2006) disclosure framework for a sample of US firms across five industries. In addition to overall disclosure quality, we consider the type (i.e., hard/soft) and the nature (i.e., positive/neutral/negative) of the disclosure in our analysis. Our analyses provide evidence that voluntary environmental quality is associated with firm value through both the cash flow and the cost of equity components, consistent with our expectations. More importantly, however, we demonstrate that both the type and nature of the environmental disclosures is informative in establishing the predicted relations. Thus, in addition to providing evidence on the association between voluntary disclosure quality and firm value, our results highlight the benefit of parsing broader measures (e.g. voluntary environmental disclosure quality) when examining complex relationships.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
