Voluntary Environmental Disclosure Research Articles

Custom Governance: How Do Owners and Board Together Facilitate Voluntary Environmental Disclosures?

Custom Governance: How Do Owners and Board Together Facilitate Voluntary Environmental Disclosures?

Does the Capital Market Value Carbon Emission Reductions? Evidence from China

ABSTRACT: An increasing number of Chinese companies are strengthening their commitment to corporate social responsibility (CSR) by reporting their carbon emission reductions. Research suggests that such voluntary environmental disclosures can reduce information asymmetry, decrease the cost of capital, and thus enhance firm value. However, a significant research gap exists because this evidence mainly derives from developed countries, with limited consideration given to emerging countries, where the capital market often lacks robust informational content. To fill this research gap, we endeavor to explore the firm-value effects of the disclosures and the magnitude of carbon reduction in China, the largest emerging market. By manually collecting data on carbon emission reductions from the CSR reports of Chinese listed companies from 2008 to 2013, we employ the balance sheet valuation model and ordinary least squares regression to investigate the firm-value effects of the disclosures and the magnitude of carbon emission reductions. The empirical results show that firm value is positively associated with not only voluntary carbon emission reduction disclosures, but also the magnitude of carbon emission reductions. In our sample, for every additional ton of carbon emission reduction, firm value increases by approximately 340 yuan (equivalent to 44 euros or 52 US dollars). We also find that the firm-value effects of carbon emission reductions are more pronounced in high-pollution industries than those in low-pollution industries. Further channel tests reveal that on average, agency problems, as measured by selling, general, and administrative expenses, are lower in firms that disclose carbon emission reduction information than those that do not. In addition, firms with carbon emission reduction disclosures can obtain more green subsidies than those without such disclosures. To mitigate climate risk, firms should proactively engage in carbon emission reductions, which can potentially receive a positive recognition from the capital market. Our study also provides valuable insights for regulators in terms of establishing and enhancing carbon accounting standards to encourage corporate involvement in carbon reductions.

National institutional context and voluntary carbon disclosure: An international study of the banking industry

The determinants of banks' voluntary environmental disclosure have been little studied in the literature. Drawing from the assumptions of institutional theory, this paper analyzes the impact of the national context, including the general legal system and the environmental policy of states, on banks' carbon disclosure. Based on three international samples, the results show a positive relationship between the strength of the legal system (degree of law enforcement), the stringency of environmental regulations, environmental performance, and the quality of banks' carbon disclosure.

Framing as a strategy for defending the perceived authenticity of voluntary environmental disclosure in the digital era

AbstractIn the digital age, to attract readers' attention, environmental activists may change the way corporate environmental information is reported and reinterpret it in social media. This paper aims to discuss how firms protect the perceived authenticity of their environmental disclosure. This study suggests that framing enables firms to clarify the disclosure focus for their readers in the information‐overload context. We propose five framing strategies and evaluate their effects on the stigmatized categorization, attribution, and diffusion of environmental information. By doing so, we add framing strategies to the managerial toolkit available for protecting the perceived authenticity of corporate voluntary environmental disclosure.

Fear of Exit? Institutional Investors and Voluntary Environmental Disclosures

Fear of Exit? Institutional Investors and Voluntary Environmental Disclosures

IMPACT OF ENVIRONMENTAL DISCLOSURES QUALITY ON THE INFORMED DECISION OF RELEVANT STAKEHOLDERS IN NIGERIA

This study investigates the impact of environmental disclosure quality on the informed decision of users of corporate reports based on the assumptions of the decision usefulness theory. The survey design was adopted in this study using a questionnaire that was administered to preparers and users of corporate reports. A combination of t-test and regression was used to test the hypotheses of the study. The findings confirm the low level of voluntary environmental disclosure mechanisms practiced in Nigeria. Finally, preparers are aware of the information need of users. In conclusion, the study shows that much priority is not given to environmental reports. It is recommended from this study that firms should ensure that the level of their EDQ is continuously improved to aid user decisions and secure a positive impression of stakeholders about the firms. Government and standard setters should gear efforts towards standardization of environmental disclosures of firms in Nigeria through legislation and issuance of standards to improve the quality of disclosures.

Corporate social responsibility, financial fraud, and firm's value in Indonesia and Malaysia

The purpose of this research is to determine if financial fraud can lessen the direct impact of Corporate Social Responsibility (CSR) on firm value. Proxies of the CSR are fourth-generation of the Initiative Global Reporting, religiosity, Philanthropy, Voluntary Environmental Disclosure Index, and ISO 26000. The company's value proxy is Price Book Value and Profit Margin. At the same time, the proxy of financial fraud is the F-Score model. This researcher researches mining companies engaged in Indonesia and Malaysia's oil and gas sectors. This study uses a fixed effect model based on the Hausman diagnostic test statistics. This research reveals evidence that financial fraud can reduce the impact of CSR on a firm's value.

Does media exposure and media legitimacy moderate the relationship between environmental audit committee and environmental disclosure quality?

Purpose This study aims to examine the moderating effect of media exposure and media legitimacy on the environmental audit committee (EAC) regarding environmental disclosure quality as measured by voluntary and timely disclosure. Design/methodology/approach This paper was based on a sample of 81 French nonfinancial companies listed on the SBF 120 index and covered a six-year period; from 2014 to 2019. To test the hypotheses, a feasible generalized least squares regression was applied. Moreover, the authors checked the results using an additional analysis and the generalized method of moment model for endogeneity problems. Findings The results obtained show that for 482 French firm-year observations during the period 2014–2019, the media exposure does not play a moderating role between the EAC and the voluntary environmental disclosure; However, it plays a moderating role between the EAC and the timely environmental disclosure. The results also show that media legitimacy plays a moderating role between the EAC and the quality of environmental information. After testing for endogeneity problems, the findings remain unchanged. Research limitations/implications The findings of this study may be of interest to academic researchers, practitioners and regulators who are interested in determining the quality of environmental disclosure by considering the role of the EAC while giving a role to media exposure and media legitimacy in the French context. Considering the EAC as a powerful source of effective corporate governance to improve the quality of environmental disclosure for decision-making, the research provides valuable insights for policymakers and managers on the importance of this mechanism and the importance of the environmental media and its tone in making environmental reporting useful and relevant. Originality/value The originality of the work lies in the fact that it is one of the first works that deal with the moderating effect of media exposure on the relationship between the EAC and the quality of environmental information disclosure measured by voluntary and timely disclosure. To the best of the authors’ knowledge, no previous empirical studies have been conducted on this relationship in the French context or in other contexts.

ENVIRONMENTAL DISCLOSURE URGENCY: A LITERATURE REVIEW

The increase of public attention to environmental issues makes the companies need to be more responsible atthose matters. Environmental disclosure is a tool to meassure that responsibility. Based on the economicperpective, prior studies tried to find out the relationship beetwen voluntary environmental disclosure (VED)and economic performance, and they found various results. Another studies captured there are manyenviromental disclosure-performance gap phenomenon. Therefore, this study attemps to analyze whetherVED is neccesary or not and find out the cause of environmental disclosure-performance gap. The resultsshows that companies with bad environmental performance are recommended to release VED for creating agood image in order to defend its self from the third parties assesment, and companies with goodenvironmental performance are recommended to release VED only if it is possible to increase economicperformance. The result also shows that common causes of environmental disclosure-performance gap aregetting economic benefit as the concequences of being a environmental-friendly company without doing anygood environmental performance, besides, the company might minimize cost because environmentaldisclosure is predicited can’t give any economic benefit and avoiding loss from the accuse of the third partieswho might doubt the credibility of data and look for the company’s environmental violation that caused byproducing environmental disclosure too extensively and self-serving.

The relationship between environmental disclosure and financial performance: mediating effect of economic development and information penetration

What’s the relationship between environmental disclosure and financial performance? To answer this question, our study focus on the heavy polluting enterprises in China from 2008 to 2019 to investigate the relationship between environmental disclosure and financial performance as well as the mediating effect of provincial level characteristics namely economic development and information penetration using hierarchical linear model (HLM). Findings show that there is positive relationship between both mandatory environmental disclosure and voluntary environmental disclosure and financial performance; economic development positively relates to corporate financial performance, and it also strengthens the relationship between environmental disclosure and financial performance; information penetration positively relates to corporate financial performance, but it weakens the relationship between environmental disclosure and financial performance. As time goes on, corporate financial performance will significantly rise in general.

Voluntary Environmental Disclosure and Corporate Performance: A Study of Quoted Consumer Goods Manufacturing Firms in Nigeria

This study examined the effect of voluntary environmental disclosure on the corporate performance of quoted consumer goods manufacturing firms in Nigeria. The study specifically examined the effect of voluntary disclosure on the current ratio and quick ratio. The study used the ex post facto research design. The population of the study was drawn from selected consumer good manufacturing firms quoted on the floor of the Nigerian Stock Exchange. The study was based on secondary sources of data, collected from annual financial reports. The study found that voluntary disclosure is positively related to the current ratio and a quick ratio of quoted manufacturing companies in Nigeria. The study recommended among others that to further fortify corporate governance practices among firms, there should be severe execution of Nigerian Stock Exchange sustainability disclosure guidelines for manufacturing firms.

Corporate Environmental Disclosure Quality and Impression Management Theory in Nigeria

Corporate environmental disclosure acts as a means of providing environmental information to fulfill firms’ accountability relationship with stakeholders and to express firm’s environmental awareness. However, the level of environmental disclosure by Nigerian firms is still low and the relationship with actual environmental performance is still inclusive. This study examines this phenomenon using the impression management theory. The theory asserts that firms provide environmental information as an attempt to control the impression of the public and the stakeholders. The sample of the study comprises of firms listed on the Nigerian stock exchange as at 31 st December, 2020. GRI disclosure index is used in collecting environmental disclosure data from the annual reports of the sampled firms. The environmental performance (EP) data was collected from the ministry of environment website. The result of this study reveals that EP does not have any influence on companies’ disclosure of environmental information. The result of the study provides motivation for the NSE to review all existing CSR reporting framework so as to provide a guidance to firms to prepare a more objective voluntary environmental disclosure.

The influence of countries' climate change‐related institutional profile on voluntary environmental disclosures

AbstractThis paper analyzes how the regulative, normative, and cultural dimensions of institutions exert pressure both on companies' decisions to voluntarily disclose environmental information and on the quality of the information disclosed. Prior research has focused on the influence of economic, disclosure, and generic institutional determinants, although little attention has been paid to the analysis of the influence exerted by climate change‐related institutional pillars. The results show that the three institutional pillars have different effects as regards both the decision to respond and the quality of disclosure. The regulative pillar positively influences the response decision but does not influence disclosure quality. The normative pillar positively affects both the propensity of companies to disclose and the quality of the information reported. Meanwhile, the cultural pillar positively influences disclosure quality, but it has no effect on firms' decisions to disclose environmental information. This paper is the first to analyze whether the institutional profile of climate change in different countries influences voluntary environmental disclosures.

Website disclosure of environmental compliance management\u2014the case of European production companies

Companies are expected to comply with environmental laws and regulations. They also face increasing stakeholder interest in information about environmental compliance management efforts. Corporate websites serve today’s enterprises as an important medium for voluntary environmental disclosure. However, relatively little research has addressed the topic of environmental compliance management. This empirical study explores current practices of website disclosure of environmental compliance management. Data were collected through a randomly selected sample of 154 European production companies in two groups of medium-sized and very large companies. Environmental management issues concerning the functionalities and disclosure subjects observed on the company websites were recorded. The analyses revealed that in general, corporate websites contain little information about environmental management and environmental compliance management, and large companies disclose more than small companies. The results also indicate that the disclosure practices of some countries deviate remarkably from those of other countries in the sample.

Does national carbon pricing policy affect voluntary environmental disclosures? A global evidence

This paper examines the relationship between institutional pressure of national carbon pricing policy and the voluntary environmental disclosures (VED) of electricity-generating firms. Using a sample of 103 firms from forty-four countries for 2015–2017, we find that the implementation of carbon pricing policies at the national level increases the VED quantity significantly. Put differently, firms located in the carbon pricing countries disclose more environmental information than those in non-carbon pricing countries. Besides, we also provide evidence that firms adopting internal carbon reduction strategies disclose more information than firms with no carbon reduction strategies. Overall, our findings are consistent with the view of the coercive isomorphism branch of the institutional theory that the government's policy for one aspect of environmental issues (i.e., emissions reduction) may have a pervasive indirect impact on the other environmental aspects (i.e., VED) of the organizations.

Social and environmental disclosure of the largest companies in Brazil’s agribusiness sector

Purpose Brazil’s agribusiness sector is an acknowledged and relevant player in international markets. Companies operating in this industry have been closely observed by society with increasingly critical judgment relating to production systems and the impact of these companies. In this context, this study aims to assess the voluntary disclosure of social and environmental information of Brazilian agribusiness companies and test the determinant factors. Design/methodology/approach The research hypotheses are based on stakeholder theory, legitimacy theory and results from social and environmental disclosure studies. Confirmatory factor analysis was adopted to build the dependent variables, and the Tobit model was used for hypotheses testing. The sample includes the 150 largest agribusiness companies in Brazil. Findings The results show that the disclosure measures of agribusiness companies differ by segment and that internationalization, negative media exposure and pollution are critical factors in increased voluntary social and environmental disclosure. Practical implications Knowledge about the determinants and quality of voluntary disclosure is key in driving social responsibility policies. In addition, they are useful to executives for the preparation of social responsibility and environmental reports. Originality/value The results of this study contribute to the literature on voluntary social and environmental disclosure by providing information on an important but poorly studied sector, namely, agribusiness in Brazil.

Impact of governance structures on environmental disclosures in the Middle East and Africa

PurposeThis study aims to investigate the impact of corporate governance structures on environmental disclosure practices in the Middle East and Africa (MEA).Design/methodology/approachThe research model uses a panel data set of 121 publicly listed (non-financial and non-utility) firms from 11 MEA countries over the period 2010-2017, uses alternative dependent variables and regression techniques and is applied to various sub-groups to improve robustness.FindingsThe empirical results strongly indicate that MEA firms with high governance disclosures tend to have better environmental disclosure practices. The board characteristics of gender diversity, size, CEO/chairperson duality and audit committee size impact positively on MEA firms’ voluntary environmental disclosures, whereas board independence has a negative influence.Research limitations/implicationsThis study advances research on the relationship between corporate governance structures and environmental disclosure practices in MEA countries, but is limited to firms for which data are available from Bloomberg.Practical implicationsThe results have important practical implications for MEA policymakers and regulators. The positive impact of board gender diversity on firms’ environmental disclosures, policy reforms should aim to increase female directors. MEA corporations aiming to be more environmentally friendly should recruit women to top managerial positions.Originality/valueThis is thought to be the first study to provide insights from the efficiency and legitimation perspectives of neo-institutional theory to explain the relationship between MEA firms’ internal governance structures and environmental disclosures.

Industrial Discourse in Voluntary Environmental Disclosure Questionnaires Responses: A Case Study

Deploying a grounded theory approach, this case study examines 9 years of a nonrenewable energy company’s responses to a voluntary environmental disclosure questionnaire to discover how industrial discourse about climate change is used by industry writers. Through using the rhetorical strategies of emotions, affect, and mythic narrative within theory, balancing norm, and dominion frames, the company communicates climate change does not impact their secure economic future due to their proactive approach toward regulatory compliance with technological innovation and attentive internal and external policy oversight.

Empirical analysis on corporate environmental performance and environmental disclosure in an emerging market context

PurposeThe purpose of this study is to investigate the association between environmental performance of firms and the level of voluntary environmental disclosure in emerging markets.Design/methodology/approachWe used tobit regression OLS andt-test methods to reveal the association between environmental performance and the level of voluntary environmental disclosure.FindingsWe find a significant positive association between the level of discretionary environmental disclosures and corporate environmental performance. The result is in line with the arguments of economics disclosure theory that argues environmentally good performers disclose more.Practical implicationsMany of the environmentally good firms in Turkey are also listed in the “BIST Sustainability Index,” and this situation can be the result of the relative power of external regulations. Accordingly, it can be suggested to increase the community and governmental pressures for environmental reporting but also gives importance to increase intrinsic motivations for companies to engage in disclosure practices.Originality/valueThis study shed light on relation between environmental performance and environmental disclosure in an emerging market context. Also, it is revisited that the relation between environmental performance and the level of environmental disclosure by testing two different predictions on the level of environmental disclosures.

The Verbal Tone in Mandatory Environmental Disclosures: Evidence from Changes in Disclosures Following SEC Guidance

ABSTRACT This study investigates whether the verbal tone of environmental disclosures in companies’ annual reports changed following SEC interpretive guidance released in 2010. The content analysis software DICTION is used to construct measures of verbal tone and size of the disclosures. For a sample of companies in both environmentally sensitive and non-sensitive industries, we find an increase in the degree of ‘realism’ and ‘certainty’ of the disclosures following the release of the SEC guidance. The results hold after controlling for environmental performance and firm specific characteristics. In addition, the size of environmental disclosures increased in the year preceding the release of the guidance, suggesting that companies may have anticipated an interpretive release from the SEC. Furthermore, there were no significant changes in the size and verbal tone of voluntary environmental disclosures over the same time period, suggesting that the changes in the annual reports filed with the SEC resulted primarily from companies’ responses to the interpretive guidance. These findings show that impressions management is less prevalent in mandated environmental disclosures.