Abstract
Recent studies have examined the motivations of firm voluntary disclosure of environmental and social responsibility performance stand-alone reports. We extend this literature by examining firm voluntary disclosure of environmental performance in stand-alone reports (CERs) and 10-Ks. We model disclosure in these reports as jointly determined, endogenous functions of private information regarding environmental performance and demand for disclosure through shareholder resolutions. When voluntary and mandatory environmental performance information is subsequently made public, we examine the relationship between the level of disclosure and firm risk premium. Our results relating to firms in the chemicals and electric utility industries show a positive association between the levels of voluntary disclosure in CERs and 10-Ks. There is a negative relationship between emissions and CER disclosure. Environmental disclosure related shareholder resolutions are associated with higher disclosures in both types of reports. Finally, the association between disclosure and firm risk premium is dependent on industry sector.
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