Corporate Environmental Disclosure Research Articles

Firm risk associated with environmental and corporate social disclosure: The moderating role of board gender diversity

AbstractThis study examines the relationship among corporate social and environmental disclosures, firm risk, and board gender diversity. This paper offers fresh insights into the relationship between corporate social and environmental disclosures and gender diversity and firm risk., Using panel data of Chinese nonfinancial A‐share‐listed companies from 2008 to 2020, we discover that the correlation between gender diversity on the board and corporate social and environmental disclosures has a significant negative influence on firm risk. The findings also revealed that the impact of gender diversity and corporate social and environmental disclosures is more pronounced to mitigate firm risk in nonstate‐owned enterprises than in state‐owned enterprises. For robustness, we used the generalized method of moments to control for reverse causality and endogenous variables' existence; the findings are similar to the main results. The study contributes to the literature by offering a contingency approach to examine the relationship between corporate social and environmental disclosures and firm risk and sheds light on the relationship in the context of a developing economy.

Board centrality and environmental disclosures: Evidence from the polluting Industries in China

We examine the association between board centrality and corporate environmental disclosure using hand-collected data from Chinese-listed firms in heavily polluting industries. We find that board centrality has a positive effect on corporate environmental disclosure. We also show that this positive effect emanates from the critical role of the board in monitoring and resource distribution, and its incentive to promote information transparency. Our results, which are robust to a set of robustness checks, have important implications for both regulators and investors.

The Sustainability committee and environmental disclosure: International evidence

This paper contributes to the growing debate about the role of board-level sustainability committees, focusing on whether they leverage sustainability expertise for impactful environmental initiatives or purely serve as symbolic actions aimed at greenwashing. Using a large set of firms from 35 countries over the 2010–2017 period, we find that the presence of a sustainability committee is positively associated with higher-quality GHG emissions disclosure. This finding is robust to endogeneity and sample selection bias concerns. The sustainability committee effect is more pronounced when external environmental institutions are too weak to properly monitor corporate environmental disclosure. Our findings suggest that sustainability committees are not a symbolic management tool, but play a crucial role in enhancing corporate environmental disclosure.

Retreat in order to advance: Environmental performance below legality aspiration and corporate disclosure strategy

Environmental legality threats can drive corporate environmental disclosure. Based on performance feedback theory, this paper proposes that environmental legality is an aspiration of corporate environmental performance. Firms are more likely to change environmental disclosure strategies when environmental performance falls below legality aspiration. By analyzing the impression management of the environmental section in the corporate social responsibility (CSR) reports, we find that firms decrease pictures and tables in environmental disclosure after they receive environmental administration penalties. This change is stimulated by firms' reputation-saving motivation. The finding is different from prior studies stressing positive strategies to respond to environmental legality challenges. We also find that firms adopt positive respondent behavior, such as green innovation, when they show environmental performance in a poor presentation.

The landscape of accounting-related research in Indonesia: mapping distinctive settings and future research agenda

PurposeThis systematic literature review presents the evolution of accounting-related research in the Indonesian context. We examine 55 academic articles from the initial 296 records of accounting and finance research in the Q1 Scopus-indexed journals from 1995 to 2022. This study sheds light on Indonesia’s main research streams, unique settings and urgent future research agenda.Design/methodology/approachThis study adopts a systematic approach for a comprehensive literature review. We select articles according to a series of criteria and compile the metadata for the bibliographic mapping.FindingsOur bibliometric analysis suggests five main research streams, namely (1) political connection, (2) capital market, (3) audit and accountability, (4) firm policy and (5) banking. We identify the following distinctive country settings, which are well discussed in extant literature: political connection, two-tier board system, weak accounting profession, information opacity and cultural impact on accounting. We outline prospective agendas to examine the institutional mechanisms’ role in addressing major environmental challenges through accountability.Originality/valueThis study offers unique contributions to the literature by comprehensively reviewing accounting-related research in Indonesia. Despite Indonesia’s economic and environmental importance, it has received limited attention from scholars. Using dynamic topic analysis, we highlight the need to examine the role of informal institutions, such as political connections and culture and formal institutional mechanisms, such as corporate governance and environmental disclosure.

Norm spillover? How environmental regulation in downstream industries affects upstream corporate environmental disclosure

ABSTRACT Although firms nowadays widely adopt environmental information disclosure (EID) to respond to stakeholder pressures, their EID quality is quite different. In this study, we examine this EID variation from the perspective of spillover. We argue that EID regulation in downstream buying firms is likely to foster a ‘norm’ of high-quality EID. This norm is likely to spill over to the upstream supplying firms via the influence of buying firms. Using publicly listed firms in China’s stock exchanges during 2011–2020 as a sample, we find that firms are more likely to have high-quality EID when their key buying firms are located in EID regulated (heavy-polluting) industries. Further, media coverage of the supplying firms and the state ownership of buying firms are likely to exaggerate the norm spillover effect. The results still hold after several robustness tests. Additional analysis shows that interlocking directors between buying and supplying firms amplify the effect of buying firms’ EID regulation, which suggests the underlying mechanism of spillover. Finally, heterogeneity analysis shows that the effect of buying firms’ EID regulation varies across suppliers with different firm characteristics. Our findings contribute to the literature on both corporate EID quality and spillover effect in the supply chain settings.

Confluence of Board Members' Financial Literacy, Corporate Environmental Disclosure, and Financial Reporting Quality

Objective: This study aim to explores the interesting relationship between the financial literacy of board members, earnings management (EM), and corporate environmental disclosure (CED) in Malaysian listed manufacturing companies.   Theoretical framework: We mainly address the implications of this relationship for business stakeholders and for promoting a healthy economic simulation.   Research Methods: Robust sample of 258 Malaysian manufacturing listed companies from 2016 to 2021, providing 1290 firm-year observations. A noticeable negative significance is seen when the board's financial literacy variable interacts with the link between CED and EM.   Result: This study discovered a significantly positive link between CED and EM. This result implies that CED reduces EM practises when board members are financially literate.   Conclusion: These findings highlight how important it is for qualified board members to define the association between CED and earnings manipulation (EM). They stress the value of having a well-qualified board to lessen earnings manipulation and the necessity of managers responding to CED initiatives. This is pivotal for stakeholders who aspire to make well-informed decisions, build trust, and foster sustainable practices within the business ecosystem, ultimately contributing to a more resilient and prosperous economic landscape.

Audit Committee Characteristics and Environmental Disclosure Among Nigeria Listed Non-Financial Firms

This study investigates the influence of audit committee attributes on the corporate environmental disclosure using listed non-financial firms in Nigeria as case study. The population of the study consists of all non-financial listed firms on the Nigerian Exchange Group (formerly NSE). Using purposive sampling techniques, the study selected a total 70 listed non-financial firms having required information necessary for the study between 2011 and 2020. The study employed fixed effect and feasible generalized least square (FGLS) panel regression technique. The fixed effect of FGLS regression analysis indicates that while audit committee independent and audit committee gender diversity recorded significant positive influence on the environmental disclosure among Nigerian listed non-financial firms, the impact of audit committee size and audit committee meetings were negligible. Based on results, it is not the size of the committee nor the number of their meetings that matter for the disclosure of environmental information but the composition of the committee in terms of female and independent members representation. In conclusion, the study found evidence in support of the critical role of audit committee characteristics in environmental disclosure practices among Nigerian listed non-financial firms. Hence, it is recommended that efforts should be made to encourage higher composition of female and independent members on the audit committee.

Environmental information disclosure, earnings quality and the Readability and Emotional Tendencies of Management Discussion and Analysis

This study aims to investigate how corporate environmental disclosure affects the readability and tone-emotional tendency of management discussion and analysis reports of Chinese listed companies from 2018 to 2020. Moreover, this study introduces earnings quality indicators to further explore the mediating and masking effects of earnings quality on the relationship between environmental disclosure and report quality. The main findings of this study are as follows. First, the more comprehensive the environmental disclosure, the higher the readability and the more positive the tone of the management discussion and analysis reports. Second, the more comprehensive the environmental disclosure, the higher the earnings quality of the companies, which indirectly enhances the readability of the management discussion and analysis reports, and indirectly enhances the credibility of the positive tone.

“Environmental disclosure greenwashing” and corporate value: The premium effect and premium devalue of environmental information

AbstractEnvironmental disclosure is a crucial method for companies to demonstrate their environmental efforts. However, in some institutional contexts, companies may be inclined to “greenwash” their environmental disclosures, strategically seeking social rewards. Anchored on impression management theory, this study delves into the relationship between environmental disclosure and corporate value. The research substantiates the premium effect of environmental information while shedding light on the adverse impact of “environmental disclosure greenwashing” (EDG) on corporate value. Moreover, EDG leads to a further devaluation in the premium effect of environmental information. A more profound analysis reveals that the market trust acts as the mediating mechanism in the premium devaluation effect caused by EDG. Notably, when information user capability and media attention are scrutinized as distinct groups, the impact of EDG displays pronounced heterogeneity. These findings provide a theoretical foundation for verifying the authenticity of corporate environmental disclosures. Additionally, they offer valuable policy insights for rectifying EDG practices and enhancing environmental disclosure mechanisms.

Corporate climate risk disclosure: assessing materiality and stakeholder expectations for sustainable value creation

PurposeThis study aims to evaluate the adequacy of climate risk disclosure by providing empirical evidence on whether corporate disclosure meets rising stakeholders’ demand for risk disclosure concerning climate change.Design/methodology/approachDrawing on a triangulated approach for collecting data from multiple sources in a longitudinal study, we perform a panel regression analysis on a sample of multinational firms between 2007 and 2021. Inspired by the Global Reporting Initiative (GRI) principles, our innovative and inclusive model of measuring firm-level climate risks underscores the urgent need to redefine materiality from a broader value creation (rather than only financial) perspective, including the impact on sustainable development.FindingsThe findings of this study provide evidence of limited corporate climate risk disclosure, indicating that organisations have yet to accept the reality of climate-related risks. An additional finding supports the existence of a nexus between higher corporate environmental disclosure and higher corporate resilience to material financial and environmental risks, rather than pervasive sustainability risk disclosure.Practical implicationsWe argue that a mechanical process for climate-related risk disclosure can limit related disclosure variability, risk reporting priority selection, thereby broadening the short-term perspective on financial materiality assessment for disclosure.Social implicationsThis study extends recent literature on the adequacy of corporate risk disclosure, highlighting the importance of disclosing material sustainability risks from the perspectives of different stakeholder groups for long-term success. Corporate management should place climate-related risks at the centre of their disclosure strategies. We argue that reducing the systematic underestimation of climate-related risks and variations in their disclosure practices may require regulations that enhance corporate perceptions and responses to these risks.Originality/valueThis study emphasises the importance of reconceptualising materiality from a multidimensional value creation standpoint, encapsulating financial and sustainable development considerations. This novel model of assessing firm-level climate risk, based on the GRI principles, underscores the necessity of developing a more comprehensive approach to evaluating materiality.

Corporate environmental disclosure and sustainability governance practices among listed manufacturing firms in Nigeria

Corporate environmental disclosure and sustainability governance practices among listed manufacturing firms in Nigeria

Apakah Koneksi Politik Mempengaruhi Pengungkapan Lingkungan?

Purpose: This research aims to determine the influence of political connections, company size and company age on environmental disclosure in manufacturing companies listed on the IDX in 2020-2021, either simultaneously or partially, by using company size and company age as control variables.. Methodology/approach: This research uses quantitative methods through a sampling approach, obtaining 99 companies with 198 data. Using multiple linear regression analysis. Data processing was carried out using SPSS Statistics 25. Findings: The results of this study indicate that political connections and company size have a significant positive impact on corporate environmental disclosure. However, company age does not have a significant impact on environmental disclosure. Practical and Theoritical contributio/Origanlity: This research provides knowledge about political connections, company size and company age for environmental disclosure of manufacturing sector companies in 2020-2021. The implication is that companies use environmental disclosure to generate good relations with the government and are expected to increase positive views of the company and attract investors to invest. Research Limitation: This research is still limited to the scope of the research sample for a research period of two years so that the results do not reflect the long-term situation. In addition, it does not discuss the quality of environmental disclosure items disclosed by the company.

PENGARUH PENGUNGKAPAN EMISI KARBON DAN KINERJA KEUANGAN TERHADAP REAKSI INVESTOR DENGAN KINERJA LINGKUNGAN SEBAGAI PEMODERASI

The objective of this study is to investigate how environmental performance serves as a moderator in the association between carbon emissions disclosure (CED) and investor response. The objective of this research is to investigate the correlation between non-standard stock returns and carbon emission disclosure, utilizing environmental performance as an intermediary factor. The present analysis comprises manufacturing firms that were listed on the IDX and PROPER platforms during the period spanning from 2017 to 2020. The statistical software package SPSS version 22 was utilized to perform the hypothesis testing. The dataset comprised 27 distinct commercial entities, encompassing a cumulative count of 138 individual records. The study's sample was selected through the utilisation of purposive sampling. Multiple regression analysis is utilized in this study for the purpose of hypothesis testing. The aforementioned results indicate that the implementation of Corporate Environmental Disclosure (CED) and favorable financial performance have a constructive influence on the responses of investors. The relationship between the disclosure of carbon emissions and investor response is influenced and reinforced by environmental performance. However, the relationship between financial performance and investor response is not influenced by environmental performance.

Corporate environmental disclosures and financial distress: evidence from an emerging market

This study examines the effect of corporate environmental disclosures on financial distress in Vietnam. From sustainability reports and annual reports of firms listed on the Ho Chi Minh Stock Exchange, we manually collected a dataset on environmental information disclosures about seven management standards, including the utilization of raw materials, energy usage, water consumption, conservation of land and soil, gas emissions, wastewater and solid waste, and compliance with environmental protection laws. We measure the level of environmental information disclosures based on the counts of these standards that a firm has disclosed and employed both Altman’s Z-score and Ohlson’s O-score as proxies for financial distress. The research sample includes 269 firms from 2015 to 2020. The findings indicate that firms with better corporate environmental disclosures tend to have lower financial distress levels. The results are robust with respect to different measures of environmental information disclosures and financial distress, and have implications for investors, creditors, and policymakers. We contribute to the literature by providing evidence from a frontier market with weak legal institutions, where various environmental issues and regulations about disclosing environmental information have just gone into effect.

Financial Analyst Coverage and Corporate Environmental Disclosure

AbstractConsistent with the monitoring function played by financial analysts, we find that greater analyst coverage leads to the same extent of improvement in the quantity and quality of environmental information disclosed by the firm. This result is remarkably robust after conducting a difference‐in‐differences analysis that exploits brokerage closures and mergers as an exogenous decrease in analyst coverage, as well as using an instrumental variable approach. The positive influence of analyst coverage on corporate environmental disclosure is particularly evident for firms that cause high environmental damage, firms with low information asymmetry and those followed by analysts with superior experience, accuracy and reputation. Taken together, our empirical findings provide new insights into the bright side effect of analyst coverage on corporate environmental‐related activities.

Corporate governance perspective on environmental reporting: Literature review and future research agenda

AbstractThe last three decades have witnessed substantial growth in the literature exploring the motives and drivers of corporate greening. Extant research analyzing the governance determinants of corporate environmental disclosure provides competing and contrasting results; despite the growing sustainability challenges create an urgent need for effective monitoring and incentive mechanisms to promote corporate transparency and accountability. This warrants further inquiry in the field, yet very few comprehensive reviews have been presented on governance determinants of corporate environmental disclosure. To fill this gap we conduct a systematic review of 121 published papers and distinguish the governance mechanisms fostering corporate environmental disclosure. Our paper identifies factors influencing the adoption, extant, and quality of environmental disclosure, and provides useful future research directions.

The Effect of Profitability, Good Corporate Governance, and Environmental Disclosure on Firm Value in Mining Companies Listed on The Indonesia Stock Exchange

The purpose of this research is to examine and analyze the influence of profitability, good corporate governance, and environmental disclosure on the firm value of mining companies listed on the Indonesia Stock Exchange. The research method utilized is descriptive research with a quantitative approach. The study population encompasses all mining companies registered on the Indonesia Stock Exchange (IDX) within the period from 2019 to 2022. In this study, a non-probability sampling technique was employed, specifically purposive sampling, resulting in a sample size of 72 from a span of 18 companies over 4 years. The variables under scrutiny include Return on Assets (ROA) as a measure of profitability, the proportion of independent board commissioners as an indicator of good corporate governance, the number of GRI disclosures as an indicator of environmental disclosure, and Tobin’s Q as a gauge of firm value. The analytical methodology and hypothesis testing were carried out using the Partial Least Square (PLS) method with SmartPLS 3.2.9 software. The PLS analysis consists of three stages: Outer Model, Inner Model, and Hypothesis Testing. The hypothesis testing results show that profitability has a significant impact on firm value, while good corporate governance and environmental disclosure do not exhibit a significant influence on firm value. These findings contribute to the understanding of how these factors interplay within the mining sector. However, this study has several limitations, including the variables used, the company's disclosures, and the limited period. Subsequent research can address these limitations and delve deeper into exploring the relationships of these variables or other variables with firm value.

Environmental Awareness of Enterprises through Their Disclosure Magnitude: UK and US Evidence

In the absence of a validly mandatory public policy and a meaningful conceptual framework, corporate environmental disclosure practices have been diverse (Matthews, 1993). In other words, the lack of a single generally accepted standard in which environmental reports can be developed, akin to that of financial reporting principles, is one of the reasons for this undoubted dissimilarity in environmental reporting practices. However, there are imperative requirements relating to environmental information disclosure in many developed countries, for example, environmental related information is required in the Business Review in accordance with s.417 of the Act (Great Britain. Companies Act 2006) in the UK and the US Securities and Exchange Commission (SEC) has developed rules governing disclosure of environmental liabilities, in relation to Items 101, 103, 303 and 503(c) in SEC Regulation S-K (SEC, 2008). The former is rather vague as it is not underpinned by a robust speculative structure, whereas the latter has only focussed on the disclosure of financial information that is environmentally related despite the non-financial nature of predominant environmental information. In response to these, the International Accounting Standards Board (IASB) and The International Sustainability Standards Board (ISSB) has very recently issued the foundational standards, which are IFRS S1 and IFRS S2, to steer corporate sustainability-related disclosures worldwide. The former inaugurally provide general conceptual foundations and the latter has primarily pointed on climate risks and opportunities. The other dimensions are forsaken to line up sometimes in the future. Keywords: Environmental Information Disclosure, Environmental Reporting, Disclosure Quantity, UK, US

Environmentally Sensitive Industries Attributes and Environmental Disclosure in Nigeria: Modelling the Double Hurdle Technique

The environmental damages firms’ activities have caused, has aroused the need for firms to be very sensitive to their operations. The 2011–2020 research examines firm-specific features and corporate environmental disclosure for listed environmentally sensitive firms in Nigeria. Age, size, leverage, and management ownership are the explanatory variables. Environmental disclosure explains the GRI environmental disclosure index. The research assessed corporate involvement in environmental disclosure using double hurdle regression. The population and sample are all 23 Oil & Gas and Industrial Goods firms. The research found that firm size and financial leverage influence disclosure choice and extent of disclosure. Firm age does not affect disclosure choice or intensity. The study proposes that Nigerian corporations should give detail disclosure of environmental information. It should be a listing requirement for companies. This promotes green accounting. As captains of industries, managers should push environmental policies that improve their environmental performance to better align the organisation and its stakeholders.