This paper's purpose is to assess how management's perceptions regarding certain aspects of environmental reporting relate to the firm's actual reporting strategy. Toward that end, we propose a model where a firm's environmental disclosure is conditional upon executive assessments of corporate concerns. The study relies on a survey that was sent to environmental management executives from European and North American multinational firms enquiring about the determinants of corporate environmental disclosure. Responses from these executives were (...) then contrasted with their firms' actual environmental reporting practices, which was measured using a comprehensive multi-criteria grid. Results show that there is a relationship between environmental managers' attitudes toward various stakeholder groups and how those managers respond to the stakeholders via the decision to disclose and the actual disclosures made. Our model provides a perspective as to how a firm responds to the numerous stakeholders to whom it must be accountable. This accountability in turn relates to how the company communicates its actions to society in order to achieve or maintain its social legitimacy. (shrink)

This paper's purpose is to assess how management's perceptions regarding certain aspects of environmental reporting relate to the firm's actual reporting strategy. Toward that end, we propose a model where a firm's environmental disclosure is conditional upon executive assessments of corporate concerns. The study relies on a survey that was sent to environmental management executives from European and North American multinational firms enquiring about the determinants of corporate environmental disclosure. Responses from these executives were (...) then contrasted with their firms' actual environmental reporting practices, which was measured using a comprehensive multi-criteria grid. Results show that there is a relationship between environmental managers' attitudes toward various stakeholder groups and how those managers respond to the stakeholders via the decision to disclose and the actual disclosures made. Our model provides a perspective as to how a firm responds to the numerous stakeholders to whom it must be accountable. This accountability in turn relates to how the company communicates its actions to society in order to achieve or maintain its social legitimacy. (shrink)

For the last 15 years, companies have extensively increased their environmental disclosure relative to their environmental strategy in response to institutional pressures. Based on a computerized content analysis of the annual reports of the 55 largest French industrial companies, we describe environmental disclosure with respect to the different strategies implemented by companies over a period of 6 years. The results show that environmental disclosure becomes more and more technical and precise for all the (...) companies. Environmental innovations are presented as a means of increasing energy efficiency and of obtaining a competitive advantage in green market products. The environmental management system implemented by proactive companies allows them to improve their environmental performance. However, the results show that the economic situation significantly influences the way environmental issues are addressed. (shrink)

Building on agency and resource-based view theories, this study investigates the level of environmental disclosure (ED) practices of family versus non-family firms and explores the moderating role of board gender diversity. We test our hypotheses on a 3-year (2018–2020) panel data sample comprising 324 observations of Italian small- and medium-sized enterprises traded on the Euronext Growth Milan. Findings show that, compared to non-family firms, companies with a family firm status are characterized by lower levels of ED. Gender diversity (...) on the board, however, moderates this relationship, reducing this gap, to the extent that the family firm status is associated with higher ED when the number of women directors is high enough to constitute a critical mass. We consequently contribute to the studies on family business, corporate governance, and corporate social responsibility. (shrink)

This study investigates how firms in the gambling industry manage their corporate social disclosures about controversial issues. We performed thematic content analysis of CSDs about responsible gambling, money laundering prevention and environmental protection in the annual reports and stand-alone CSR reports of four USA-based multinational gambling firms and their four Macao counterparts. This study draws on impression management theory, camouflage theory and corporate integrity theory to examine the gambling firms’ CSDs. We infer that the CSD strategies of gambling firms (...) in Macao and the USA did not serve as vehicles for reflexivity about social responsibility or social responsiveness. Instead, the firms camouflaged legitimacy gaps about sensitive topics by adopting assertive or defensive façades, disclaiming ethical responsibility, curtailing disclosure, or offering zero disclosure. Differences between CSD strategies according to topic, location, time, and reporting channel appear to reflect four factors: pressure to report, availability of good news, whether a firm was assuming ethical responsibility for addressing the topic, and the prospective readership. This study extends our understanding of the contextual and topic-specific factors affecting the quantity and character of CSDs by firms in a contested industry. (shrink)

This article investigates stakeholder expectations associated with corporate environmental disclosure. Several articles have studied the effect that stakeholder pressure has on environmental disclosing strategies. In this article, we extend previous research to an examination of the influence of external, internal, and intermediary stakeholder groups or constituencies in turn to clarify the demands of multiple stakeholders as to firms' disclosure of sufficient and adequate environmental information. The sample comprised Taiwanese firms listed on the Taiwan Stock Exchange. (...) Our results show that the level of environmental disclosure is significantly affected by stakeholder groups' demands. External stake-holder groups, such as the government, debtors, and consumers, exert a strong influence over management intentions regarding the extent of environmental disclosure. Internal stakeholder groups, such as shareholders and employees, impose additional pressures on firms to disclose environmental information. As for intermediate stakeholder groups, environmental protection organizations, and accounting firms, these can greatly influence managerial choices regarding their environmental disclosure strategies. (shrink)

Corporate-level environmental information disclosure is increasingly common. This article studies the impact of a prominent media-generated sustainability ratings program, Newsweek’s 2009 ranking of the 500 largest U.S. firms. Using an event study methodology, the authors find the rankings had a significant impact on shareholder value. Firms in the top 100 experienced abnormal returns after the information release that were 0.6%–1.0% higher than returns of firms in the bottom 400. The form of the information released had significant effects as (...) well. Nuanced environmental score variables had no independent impact on market outcomes; only the final ranking mattered. This article also explores possible channels through which the rankings may have had their impact. The authors find suggestive evidence that private and public politics mechanisms were the most important. (shrink)

Two fundamental business ethics issues that repeatedly surface in the academic literature relate to business's role in the development of public policy [Suarez, S. L.: 2000, Does Business Learn? (The University of Michigan Press, Ann Arbor, MI); Roberts, R. W. and D. D. Bobek: 2004, Accounting, Organizations and Society 29(5-6), 565-590] and its role in responsibly managing the natural environment [Newton, L.: 2005, Business Ethics and the Natural Environment (Blackwell Publishing, Oxford)]. When studied together, researchers often examine if, and how, (...) corporations influence environmental policy decisions. Drawing from literatures on corporate political activity, corporate social and environmental performance, and corporate environmental disclosure, we develop and empirically examine two research questions concerning the relations between corporate political expenditures, environmental performance, and environmental disclosure. The questions are: (1) Do corporations that are poorer environmental performers spend more on political activities than their better-performing counterparts? (2) Is there an association between corporations' spending on political activities and the extent of their financial report environmental disclosures? We investigated these questions through analyses of data we gathered on a sample consisting of 119 U.S. environmentally sensitive firms for the 2001-2002 election cycle. After controlling for firm size and specific industry effects, our tests reveal a significant, inverse relationship between firm environmental performance and political spending. This is consistent with the notion that U.S. firms with relatively poorer environmental performance records engage more intensely in corporate political activities as part of their overall strategic management of their relationship with the state. In addition, a significant and positive association between the amount of political spending and the extent of environmental disclosure suggests that environmental disclosure and political spending are both proactive, complementary tactics to strategically manage public policy pressure. If corporations' strategies are intentionally designed to unreasonably limit their environmental responsibilities or to misrepresent firm environmental performance, then we argue that these activities reflect a significant lapse in ethical conduct. (shrink)

This study investigates the social and environmental disclosure practices of socially responsible Chinese listed firms as displayed in their annual reports and corporate social responsibility reports from the perspective of stakeholders. A stakeholder-driven, three-dimensional social and environmental disclosure index that integrates the quantity and two aspects of the quality of disclosure perceived by stakeholders is constructed to assess the social and environmental disclosures in firm annual reports and CSR reports. The study results indicate that (...) stakeholders perceive different disclosure types and disclosure items as important to differing degrees. CSR reports provide more stakeholder-relevant social and environmental disclosure than annual reports. (shrink)

The aim of the paper is to investigate the effects of the corporate governance model on social and environmental disclosure (SED). We analyze the disclosures of the 100 U.S. Best Corporate Citizens in the period 2005–2007, and we posit a series of simultaneous relationships between different attributes of the governance system and a multidimensional construct of corporate social performance (CSP). We consider both the extent and the quality of SED, with the purpose of identifying increasing levels of corporate (...) commitment to stakeholders and shedding some light on whether SED is used as a signal or rather as a legitimacy tool. Our empirical evidence shows that the stakeholders’ orientation of corporate governance is positively associated with CSP and SED. On the other hand, we do not find support for the monitoring intensity of corporate governance being negatively associated with social performance. We also find that CSP in the “product” dimension is positively associated with the extent and quality of SED whilst CSP in the “people” dimension is negatively associated with the extent and quality of SED. At a time when shareholders and stakeholders share more common aspects in their relationships with firms, this is a significant area to explore and this research fills an important lacuna in this respect. (shrink)

Some researchers have argued that firms with favorable environmental performance are more likely to provide voluntary environmental disclosure, while others have argued that firms with poor environmental performance are most likely to disclose. The authors propose a curvilinear relation between environmental performance and environmental disclosure that is moderated by visibility. Data were obtained from S&P 500 firms queried by Ceres' Climate Disclosure Project. Results show a U-shaped environmental performance—environmental disclosure (...) relation and a main effect for visibility but no moderating effect for visibility on the U-shaped environmental performance-environmental disclosure relation. The authors discussed the implications of these results for future research and practice. (shrink)

Some researchers have argued that firms with favorable environmental performance are more likely to provide voluntary environmental disclosure, while others have argued that firms with poor environmental performance are most likely to disclose. The authors propose a curvilinear relation between environmental performance and environmental disclosure that is moderated by visibility. Data were obtained from S&P 500 firms queried by the Ceres’ Climate Disclosure Project. Results show a U-shaped environmental performance–environmental (...) class='Hi'>disclosure relation and a main effect for visibility, but no moderating effect for visibility on the U-shaped environmental performance–environmental disclosure rela- tion. The authors discussed the implications of these results for future research and practice. (shrink)

Today, more corporations disclose information about their environmental performance in response to stakeholder demands of environmental responsibility and accountability. What information do corporations disclose on their websites? This paper investigates the environmental management policies and practices of the 200 largest corporations in the world. Based on a content analysis of the environmental reports of Fortune’s Global 200 companies, this research analyzes the content of corporate environmental disclosures with respect to the following seven areas: environmental (...) planning considerations, top management support to the institutionalization of environmental concerns, environmental structures and organizing specifics, environmental leadership activities, environmental control, external validations or certifications of environmental programs, and forms of corporate environmental disclosures. (shrink)

This paper sheds further light on the role of quantification in corporate environmental disclosures. Quantification is an inherently social practice, which has attracted a fair amount of academic interest in recent years. At the same time, in the field of social and environmental accounting there is a paucity of research on quantification or the role it plays for organisations, for organisational communication and in societies more broadly. Accordingly, in this paper, we will draw on a qualitative case study (...) to discuss the potential implications that might arise from the use of quantified information in corporate environmental disclosures. Our case study illustrates the diverse effects of quantification suggested in the prior literature by placing them in the context of corporate environmental disclosures. We discuss how quantification implies fake precisionism and promotes commensuration of incomparables, thereby limiting the discussion to themes and questions preferred by company management. We maintain that quantification, while appearing to produce neutral and value-free information, has a substantive ethical dimension through how it implicates accountability relationships as well as the respective power relations between diverse stakeholders in societies. (shrink)

Firms worldwide are increasingly required to disclose their carbon emissions due to the environmental damage associated with climate change. Because there has been no previous literature focusing on the determinants of corporate carbon disclosure integrating environmental legitimacy and green innovation, the present study attempted to develop an original framework to fill the research gap. This study explored the influence of environmental legitimacy on corporate carbon disclosure, and investigated the role of green innovation as a mediator. (...) With the samples of Carbon Disclosure Project in China from 2008 to 2012, the results demonstrate that environmental legitimacy significantly negatively influences the likelihood of corporate carbon disclosure, and that green process innovation mediates the relationship, while green product innovation has no significant mediating effect. It means that environmental legitimacy not only directly affects the likelihood of corporate carbon disclosure, but also indirectly affects it via green process innovation. Hence, companies must increase both informal and formal mechanisms, i.e., external environmental legitimacy and internal green process innovation, to engage in carbon information disclosure and ensure sustainability. (shrink)

The era of sustainable transformation has witnessed an increase in corporate environmental, social, and governance (ESG) disclosure waves. Using Chinese A-share listed companies from 2016 to 2021 as a sample, this study adopted textual analysis and machine-learning techniques to analyze ESG reports and explore the imitation behavior of ESG disclosures in emerging Chinese markets for the first time. The results show imitation behavior exists in corporate ESG disclosures from the perspective of group association. Regarding the imitation object, enterprises (...) tend to choose the peer average level as a reference rather than the best enterprise in the same industry, which reveals the inherent law that enterprises' ESG disclosures are satisfied with compliance rather than championship. In terms of effects, the ESG-mimetic isomorphic pressure has no incremental information effect but has an efficiency optimization effect. Furthermore, the imitation intensity and impact effects of ESG disclosure behavior exhibit heterogeneity owing to differences in properties, sales growth rates, and external attention. This study expands the motivation for corporate ESG disclosure behavior and enriches the empirical evidence for institutional isomorphism. (shrink)

We examine the link between a firm’s environmental and social disclosures and measures of its risk including total, systematic, and idiosyncratic risk. While we do not find any link between a firm’s E and S disclosures and its systematic risk, we find a negative and significant association between these disclosures and a firm’s total and idiosyncratic risk. These are novel findings and are consistent with the predictions of the stakeholder theory and the resource-based view of the firm suggesting that (...) firms which make extensive and objective E and S disclosures promote corporate transparency that can help them build a positive reputation and trust with their stakeholders. This in turn can help mitigate the firms' idiosyncratic/operational risk. These findings are important for all corporate stakeholders including managers, employees, and suppliers who have a significant economic interest in the survival and success of the firm. (shrink)

Despite much research now being published on Environmental, Social, and Governance (ESG) investments and Initial Public Offerings (IPOs) withdrawal risk, there appears to be a lack of evidence on the prospective IPO withdrawal risk associated with voluntary disclosure of ESG policies. This paper investigates the influence of ESG disclosure on IPO withdrawal by comparing voluntary ESG disclosure to conventional IPOs in the international market. A large data set is employed here, containing 33,535 failed and successful IPOs (...) from 1995 to 2019 from several nations with their own legal systems, cultural norms, and economic systems. The findings reveal that voluntary disclosure of ESG practices does significantly reduce the likelihood of an IPO withdrawal, by as much as 48%. These findings strongly suggest that organizations engaged in ESG activities perceive voluntary disclosure as an incentive, to adhere to social expectations. Consequently, reducing the asymmetry of information between IPO participants minimizes the withdrawal risk these companies face, hence diminishing doubts about their legitimacy. The results have consequences for IPO businesses, investors, researchers, and regulators. (shrink)

The primary objective of this research is to examine the potential influence of environmental, social, and governance (ESG) disclosure on cash holdings. Additionally, the study explores the role of earnings management (EM) practices as a mediating factor in this relationship. The sample comprises 797 companies listed on financial markets across 19 European countries, and the data spans from 2013 to 2019. The outcomes indicate a significant negative correlation between ESG disclosure and cash holdings, implying that ESG performance (...) can be used by management to resolve disputes with stakeholders. The outcomes further indicate that the existence of EM practices partially mediates the link between ESG disclosure and cash holdings. Moreover, they are robust by substitute cash holdings specification, three distinct initiatives of ESG disclosure (i.e., environment, social, and governance), and a two-stage least squares assessment. Therefore, the findings document that nonfinancial reporting in the form of ESG disclosure can assist in controlling agency conflict, leading to better valuations of company performance by stakeholders. (shrink)

As a tool for regulating the environment in China, does environmental information disclosure reduce pollutant discharge? To answer this question, we empirically analyzed the emission data of “the three wastes” in unit industrial GDP in 31 provincial units. As a measure to reduce institutional emission, environmental information disclosure only slightly influenced waste discharge reduction in the implementation period of the Eleventh Five-Year Plan of China. Instead, command control and market-based tools significantly affected waste discharge reduction. Representative (...) measures included penalties and charges. With the continuously enhanced pressure of control, environmental information disclosure facilitates the effects of command control tools on waste discharge reduction. Content analysis of environmental information disclosed by sample listed companies in Jiangsu Province was conducted. The disclosure of insufficient environmental information on emission reduction can be attributed to “adverse selection” in system performance and to the limited quality of overall environmental information disclosure. This study provides empirical evidence for Chinese policy makers to improve the system for environmental information disclosure of listed companies. (shrink)

This paper investigates potential motivations for late adopting U.S. companies to begin disclosing environmental liability amounts in their financial statements. Based on a review of 10-K reports filed from 1998 through 2012, inclusive, we identified 55 firms initiating environmental liability disclosure over the period, with all but three doing so by 2006. Focusing on the disclosers up through 2006, we argue that the companies may have used the disclosure as a tool of impression management to avoid (...) potential stakeholder mis-estimation of previously undisclosed liability exposures. We first compute tests to identify firms that may have begun the disclosure due to (1) materiality and (2) concerns of having proprietary costs imposed upon them due to changes in their environmental media coverage and environmental performance, and we find very few cases where these explanations might hold. For the remaining companies, we compared their newly disclosed liability amount, on average, with the mean level of environmental liability being disclosed by other firms in the year prior to the sample companies’ initiation, and find that it is significantly smaller, thus supporting our impression management argument. Finally, we find that overall level of environmental liability amounts was consistently decreasing over the time frame examined, suggesting that earlier adoption would have made more sense. However, it may also explain why almost no new firms began disclosing after the mid-2000s. (shrink)

According to information asymmetry theory and stakeholder theory, this article explores the impact and mechanism of environmental, social, and governance information disclosure on the company’s future stock price crash risk based on the A-share listed companies from 2010 to 2019. We find that ESG information disclosure significantly reduces the company’s future stock price crash risk. This conclusion remains robust after a series of robustness tests, such as PSM-DID. The heterogeneity analysis shows that the negative relationship between ESG (...) disclosure and stock price crash risk is more significant in state-owned enterprises, companies with higher agency costs, and when companies in the bull market. The mechanism is that companies choose to disclose ESG information to alleviate information asymmetry problems and enhance corporate reputation capital, thus reducing the future stock price crash risk. This article shows that strengthening ESG construction will help improve the efficiency of China’s resource allocation and promote the capital market development. (shrink)

Environmental information disclosure (EID) is an important part of environmental management practices, and it has become a reference for stakeholders to evaluate firms. To obtain support from stakeholders, such as analysts, firms can disclose information that indicates how good they perform in environmental protection, which we referred to as EID quality, and/or that covers multiple aspects of environmental protection, which we referred to as EID breadth. Given the importance of EID practices, this study examines whether (...) and how these two dimensions of EID affect corporate financial performance (CFP). Analyzing a sample of publicly listed manufacturing firms from 2009 to 2019 in China, we find that EID breadth has a positive relationship with CFP, while EID quality has a negative impact on CFP after controlling for EID breadth. In addition, we find that the positive impact of EID breadth on CFP is achieved by enhancing analyst coverage, while the effect of EID quality on CFP is achieved by analyst recommendation. Our work contributes to the literature on EID by uncovering different mechanisms about how EID quality and EID breadth affect CFP and offers important implications regarding the management and governance of EID practices. (shrink)

Previous research provides mixed results on the relationship between corporate environmental performance and the level of voluntary environmental disclosure. We revisit this relation by testing competing predictions from defensive and accommodative approaches to voluntary disclosure with regard to climate change. In particular, we add to the prior literature by determining the extent to which environmental performance and company media visibility interact to prompt voluntary climate change disclosure. Using ordinal regression and Ceres, KLD, and Trucost (...) ratings of S& P 500 companies, we find a positive relationship between environmental performance and voluntary climate change disclosure. We extend the literature on environmental strategies and disclosure by establishing that company visibility and issue (climate change) visibility interact with environmental performance to influence the level of voluntary climate change disclosure. (shrink)

Prior research suggests that voluntary environmental governance mechanisms operate to enhance a firm’s environmental legitimacy as opposed to being a driver of proactive environmental performance activities. To understand how these mechanisms contribute to the firm’s environmental legitimacy, we investigate whether environmental corporate governance characteristics are associated with voluntary environmental disclosure. We examine an increasingly important attribute of a firm’s disclosure setting, namely the disclosure of greenhouse gas (GHG) information. GHG information represents (...) proprietary non-financial information about the firm’s exposure to environmental concerns and is related to the firm’s operations and future profitability. Thus, we expect governance participants would view such information as a potentially important strategic device for managing stakeholders’ demands for information concerning environmental risks. We find that the presence of an environmental committee and a Chief Sustainability Officer (CSO) is positively associated with the likelihood of GHG disclosure and that CSOs are associated with disclosure transparency. Further analysis reveals that the likelihood of disclosure is associated with committee size, number of committee meetings, expertise of committee members and CSO, and overlap between the environmental committee and audit committee. Only expertise of the environmental committee members and the CSO are associated with GHG disclosure transparency, while larger committees tend to be associated with lower transparency. Our results are particularly important to those with interests in evaluating the potential role that corporate governance mechanisms play in responding to stakeholder concerns about environmental risks. Directors and officers who are considering appointment to similar governance positions, may wish to consider what attributes would make such governance positions more influential. (shrink)

Based on the institutional theory, this article attempts to examine two consecutive questions regarding the impact of various factors on corporate decision in environmental information disclosure (EID): (1) whether or not to disclose; and (2) the level of disclosure. The relevance of these factors is empirically tested using data collected from publicly listed manufacturing companies from 2006 to 2008 in China. Some interesting findings appear. We find that firms that are state-owned, those that operate in environmentally sensitive (...) industries, those having more industrial peers engaged in EID, and those with better reputation are more likely to disclose environmental information. When it comes to the content of EID, variables that attempt to capture external institutional pressures exhibit either no or weak explanatory power. Only the variable of organizational image and reputation is demonstrated to have a significant impact on both the act and the content of EID. This study provides a snapshot of the dialogues between constituencies in the organizational field and EID development. (shrink)

The objective of this research is to investigate the effects of corporate governance scores and environmental, social, and governance scores (ESG) on firms’ cost of capital in emerging countries. The sample consists of 800 firm-year observations collected from Thomson Reuters. We analyze the data using panel-corrected standard errors (PCSE) regressions, which correct for heteroskedasticity issues and contemporaneous errors in the data. When moderated with emerging market variable, our findings indicate that in the financial sector, corporate governance and ESG score (...) is negatively associated with cost of capital. Nonetheless, in the nonfinancial sector, no evidence is found on the effect of corporate governance and ESG on cost of capital. Our findings indicate that emerging countries, different institutional, ownership, and legal structural has an effect on corporate governance and ESG implementation. (shrink)

Although various studies have shown thatfarmers believe there is the need for a producer-ledinitiative to address the environmental problems fromagriculture, farmers in several Canadian provinceshave been reluctant to widely participate inEnvironmental Farm Plan (EFP) programs. Few studieshave examined the key issues associated with adoptingEFP programs based on farmers', as opposed to policymakers', perspectives on why producers are reluctantto participate in the program. A study adapting VanRaaij's (1981) conceptual model of the decision-makingenvironment of the firm, and prospect theory on valuefunctions (...) associated with the gains and losses fromrisky choices can be used to characterize how farmersperceive potential risks in environmental farmplanning. This framework can be used to assert thatfarmers are concerned about risks of public disclosureof potentially incriminating environmental informationfrom farms because the EFP program requirements foridentification and extensive documentation of farminformation is perceived by farmers as facilitatingthe accessibility of environmental information to thepublic, and public investigative efforts. Although theEFP program does not explicitly generate informationabout the environmental conditions of a farm nor thedisclosure of such information to the public, itcreates the possibility of generating and divulgingpotentially incriminating information that the farmermay want to treat as confidential. Yet, alone, theserisks of public disclosure concerns should not preventfarmers from participating in the EFP. Awareness ofand participation in environmental farm planning canbe increased if farmers and policy makers understandwhat the risks are, and how they arise. Aspects of theEFP process that have the potential to generate riskof public disclosure concerns relate to farm reviews,documentation and record keeping, and correctiveaction plans. There are legal and policy instrumentsthat can offer various forms of protection and helpminimize such risks, and these need to be assessed. (shrink)

The purpose of the Chinese Environmental Information Disclosure System is to protect the environment through public participation and public opinion. This paper uses data from listed Chinese companies in heavily polluted industries from 2008 to 2013 to examine the influence that corporate political connection has on corporate environmental information disclosure level. The results show that firstly, while environmental disclosure level has improved over time, negative information that reflects the real status of environmental management (...) has also been concealed. Secondly, although corporate political connection can influence companies to more actively disclose environmental information, it can also mask political rent-seeking in the guise of protecting the environment. This is especially prevalent in state-owned enterprises where political connection has a significant positive impact on CEID in the eastern and western parts of China. If political connections influence CEID, it will be difficult to improve the quality of environmental disclosure and provide useful information for decision makers. There is an urgent need to standardize and strictly regulate listed companies’ system for environmental information disclosure. (shrink)

Green finance plays a crucial bridge as an intermediary between finance and the environment, facilitating resource allocation. The disclosure of environmental information (EID) is vital for promoting sustainable economic development. This study utilizes panel data covering the period from 2012 to 2019, focusing on Chinese companies listed in high-polluting industries. The findings demonstrate that green finance policies have a significant positive impact on EID, while increased managerial power has a detrimental effect. However, green finance policies can mitigate the (...) negative consequences arising from moral hazard and adverse selection resulting from managerial power. They enhance the quality of EID by restricting long-term loan resources for polluting entities. The heterogeneity test reveals that the effectiveness of green finance policies in promoting EID varies across different regions of China. In non-state-owned companies, green finance policies are more effective in constraining managerial power. The moderating effect of green finance on managerial power is weakened by improvements in internal control. Green financing can offset the adverse impact of managerial power on EID when debt levels are high. Our research plays a crucial role in advancing micro-academic studies in the field of green finance. By strengthening internal controls for corporate managers and promoting EID policies, we provide essential support and guidance to decision-makers. (shrink)

We have empirically examined the relationship between top executives’ turnover and the corporate environmental responsibility by identifying the influence of ten specific turnover reasons resulting in the chairman’s departure and two important types of chairman’s succession. Using a sample of 782 manufacturing listed companies across 3 years in China, we find that the corporate environmental responsibility is negatively associated with the involuntary and negative turnover (i.e., dismissal, health and death, and forced resignation) and positively associated with improving corporate (...) governance, and not associated with the normal turnover (i.e., retirement and contract expiration) and the types of chairman’s succession (i.e., independence, and internal or external promotion). Our study significantly contributes to research in environmental disclosure by revealing the relationship between chairman’s turnover and the corporate environmental responsibility. A feasible way is suggested to regulators and other stakeholders in monitoring or assessing the possible abnormality of environmental responsibility when firms experience involuntary and negative chairman’s turnover in the emerging economies. (shrink)

The stock market’s reaction to information disclosure of environmental violation events (EVEs) is investigated multi-dimensionally for Chinese listed companies, including variables such as pollution types, information disclosure sources, information disclosure levels, modernization levels of the region where the company locates, ultimate ownership of the company, and ownership held by the largest shareholder. Using the method of event study, daily abnormal return (AR) and accumulative abnormal return (CAR) are calculated under different event window for examining the extent (...) to which the stock market responds to the EVEs. Furthermore, statistical significance of the difference in stock market reaction is compared between event firms with different characteristics. The relationship between CAR and its impact factors is examined by multivariate analysis. The findings reveal that the average reduction in market value is estimated to be much lower than the estimated changes in market value for similar events in other countries, demonstrating that the negative environmental events of Chinese listed companies currently have weak impact on the stock market. (shrink)

This study explores the impact of CEO ability on corporate environmental sustainability information disclosure. We take samples from Chinese A-share listed companies from 2010 to 2019 and use the ordinary least squares as a baseline regression model to check the relationship between CEO ability and corporate environmental sustainability information disclosure. Our findings are robust to different corporate environmental sustainability information disclosure measures and CEO ability. We found a positive association between CEO ability and corporate (...) environmental sustainability information disclosure; thus, firms with a more able CEO are more likely to disclose more corporate environmental sustainability information. Our results also found a significant negative interaction coefficient between CEO ability and CEO career concerns. As the CEO grows older, his/her ability decreases; therefore, corporate environmental sustainability information disclosure reduces. Furthermore, we document that a female CEO strengthens the relationship between CEO ability and corporate environmental sustainability information disclosure. The study results are important for understanding corporate environmental responsibility development and implementation, particularly in China. (shrink)

In recent years, companies receive pressure to release environmental, social, and governance disclosure, since these are perceived as critical issues by society. Despite this pressure, ESG disclosure practices considerably vary by firm. Prior academic literature investigated country- and firm-level factors determining such variation, alternatively adopting the institutional and legitimacy theory. By combining these theories in a unique framework, this study investigates the extent to which social structures and social legitimization influence ESG disclosure practices and each pillar. (...) Results obtained using a cross-country sample of 14,174 firm-year observations during 2005–2012 provide evidence that country-level characteristics such as a political system, labor system, and cultural system significantly affect firms’ ESG disclosure practices. However, their impact is heterogeneous in that they either reduce or enhance disclosure levels and may differ by pillar. Results for firm-level characteristics related to a firm’s visibility demonstrate a positive and homogeneous effect on ESG disclosure and each pillar. These results inform policy makers and regulators aiming to enhance ESG disclosure levels of the risk they incur when managing variables related to social structure and the benefits of exposing firms to higher visibility. (shrink)

We combine research on business groups with the socioemotional wealth approach from family firm research to examine how family control of business group firms affects voluntary disclosure of environmental performance information. Theorizing that disclosing environmental performance information weakens the owning family’s control over its business group firm, but also generates reputational benefits, we expect family ownership and disclosure propensities to relate in a U-shaped way and, further, that this U-shape is accentuated for business group firms with (...) a family CEO. Analysis of longitudinal data on disclosure decisions of South Korean business group firms supports our theory and suggests that the effect of family control on environmental performance disclosure is neither good nor bad; instead, it depends on both the level of family ownership and whether a family CEO is in place. The finding that disclosure propensities are greatest when family control of business group firms is most extensive is provocative: it suggests that the very element that often is seen to encourage inefficiencies and fraud in business groups—family ownership combined with family leadership—can also be leveraged to foster responsible behaviors. (shrink)

Governing greenwashing in environmental, social, and governance (ESG) disclosure is an important issue, but relevant literature is scant. Based on the data on Chinese A-share listed firms from 2012 to 2021, we investigate the governance role of corporate digital transformation (DT) in ESG greenwashing and its influencing mechanism. We find that DT significantly inhibits ESG greenwashing. Moreover, DT mitigates ESG greenwashing by enhancing corporate green technology innovation (i.e., innovation channel), reducing information asymmetry (i.e., information channel), and increasing trade (...) credit (i.e., resource channel). From the perspective of investor attention, we find that both retail investors' online opinions and institutional investors' site visits strengthen the inhibitory effect of DT on ESG greenwashing. Furthermore, such an inhibitory effect is more pronounced in large firms, industries with high competition, and regions with strong intellectual property protection. This research provides new insights and policy suggestions for governing corporate ESG greenwashing behavior. (shrink)

This article examines whether economic performance could affect EID and how the relationship is determined by the form of ownership from voluntarism to regulation under the current Chinese context. In this study, our empirical results show that the relationship between firms’ performance and EID is complex and the interactive impact of ownership and economic performance on EID significantly varies from voluntary disclosure to mandatory disclosure. This study provides a more comprehensive understanding of the motivations in corporate EID. The (...) performance–impression theory can be used to explain the disclosure behaviors during the period of voluntary disclosure, while the pressure–legitimacy theory can be used during the period of mandatory disclosure. The finding suggests that when evaluating corporate EID associated with economic performance in emerging economies such as China, it needs to be cautious, as which tends to vary with the form of ownership and whether there is any mandatory regulation in place. (shrink)

The purpose of this paper is to examine the relationship between the Islamic religiosity of the local community and the level of corporate environmental responsibility disclosure (CERD) in Iran, an example of an Islamic country. This paper also examines the moderating role of firm size, family ownership, and state ownership. This study is conducted using a sample of 952 observations across firms listed on the Tehran Stock Exchange. The results indicate that CERD increases with an increase in the (...) level of Islamic religiosity of the province where the firm is located. In addition, findings reveal that firm size and family ownership strengthen the aforementioned relationship. However, we provide evidence suggesting that state ownership weakens the positive relationship between the Islamic religious atmosphere and CERD. The results of this research present a new insight suggesting that the Islamic values governing a local community can significantly affect executives’ decisions regarding disclosures, particularly resulting in a decrease in executives’ selfishness and encouraging them to disclose more information about environmental responsibilities. (shrink)

It is well known that environmental burdens are more pronounced in socioeconomically disadvantaged communities, a phenomenon known as environmental injustice. Yet, there have been few studies that have addressed whether the degree of environmental injustice has changed over time. We analyze toxic releases in the United States over the first 26 years of the toxics release inventory and examine whether the decreases in toxic releases differ according to characteristics of the communities in which the emitters reside. We (...) find that decreases over these years are universal but far more substantial in high-income areas. Our results speak to both the nascent literature on information disclosure and that on environmental justice. (shrink)

Using a sample of Chinese listed firms in polluting industries for the period of 2008–2010, we empirically investigate whether and how Buddhism, China’s most influential religion, affects corporate environmental responsibility (CER). In this study, we measure Buddhist variables as the number of Buddhist monasteries within a certain radius around Chinese listed firms’ registered addresses. In addition, we hand-collect corporate environmental disclosure scores based on the Global Reporting Initiative (GRI) sustainability reporting guidelines. Using hand-collected Buddhism data and corporate (...) environmental disclosure scores, we provide strong and robust evidence that Buddhism is significantly positively associated with CER. This finding is consistent with the following view: Buddhism can serve as social norms to evoke the consciousness of social responsibility, and thereof strengthen CER. Our findings also reveal that the positive association between Buddhism and CER is attenuated for firms with higher law enforcement index. The results are robust to various measures of Buddhism and a variety of sensitivity tests. (shrink)

The growth in demand for corporate social responsibility information raises the question of how various CSR disclosure items are used by investors, an important stakeholder group driven by instrumental, moral, and relational motives. Prior research examines the instrumental motive to maximize individual shareholder wealth and the moral motive to actualize personal stewardship interests. We contribute to the literature by examining investors’ relational motive to realize positive stakeholder relationships within and between organizations and communities. The relational motive arises when investors (...) look at a company’s treatment of other stakeholder groups as a heuristic to form a perception of how fairly they will also be treated by that company in the future, and thus invest in the company they perceive as fair. Fair treatment in the future matters to the investor who purchases stock from the company or via the capital markets in exchange for becoming a shareholder and thus a residual claimant of the company. As such, the investor expects future cash flows from holding and/or reselling the stock and expects to be treated fairly by the company in the future. We propose that investors, use as a fairness heuristic, CSR disclosure items—CSR investment level or CSR assurance—that represent the company’s commitment to its stakeholders, and that the resulting fairness perception affects the extent to which the CSR disclosure items influence their investment decision. Using responses from 113 investors in an online experiment, we find that fairness perceptions are higher when CSR investment is above the industry average, and that fairness perceptions partially mediate the impact of the CSR investment level on investment amount allocations. We do not find that the presence of CSR assurance is used by investors as a fairness heuristic. Our results are robust to controlling for preferences for financial performance and hence investors’ instrumental motive, and to controlling for individual environmental attitudes, and hence investors’ moral motive. Implications for future research and public policy are discussed. (shrink)

The aim of this paper is to conduct an in-depth study on environmental management systems developed in the ceramic tiles sector. This study is conceived as an improvement on a previous survey related to an environmental diagnosis of the ceramic tiles sector where some incongruities between environmental explicit speeches and environmental actions were detected. Such incongruities revealed that firms assumed to be highly environmental committed while from facts this commitment was not so high proved. So, (...) it was necessary to introduce case study research methodology to clarify and to understand the reasons of these inconsistencies. The main objectives of our case study research are two. The first one consists in determining the relationship between firms and environment, analysing environmental positions in companies assumed in their environmental strategy and their environmental behaviour reflected in facts, while the second one attempts to establish the role played by the accounting information system in the environmental management systems of the companies in the sector. Our case study research reveals the elaboration of a larger amount of environmental accounting information for internal use than for external one. This fact is due not only to the inexistence of regulations about environmental disclosures in Spain, at that time, but also to the importance of environmental internal accounting information for management which supports the prevalence of decision-usefulness theory in the implementation of environmental management systems. (shrink)

Integrated reporting encourages firms to provide information on their environmental, social and governance activities. Studies on this area in developing countries concentrate on the environmental and social aspects of the phenomenon, thus neglecting the governance disclosure element. Given this, the study examined the disclosure practices of the governance element of integrated reporting among Ghanaian listed firms. The content of 410 annual reports of 33 firms was examined based on a checklist of 18 disclosure items. Moving (...) average scores and Wilcoxon signed-rank test were employed to analyse the data. The study found that governance reporting is receiving attention in Ghana, suggesting that the firms have recognised its potentials. The findings imply that the firms employed governance reporting as a strategy to influence public perception and obtain their acceptance. This study provides insights into how firms address the governance aspect of integrated reporting that is neglected in the literature. (shrink)

Many governments and corporations have embraced information disclosure as an alternative to conventional environmental and public health regulation. Public policy research on transparency has examined the effects of particular disclosure policies, but there is limited research on how the construction of disclosure policies relates to social movements, or how transparency and ignorance are related. As a first step toward filling this theoretical gap, this study seeks to conceptualize disclosure conflicts, the social processes through which secrecy (...) is challenged, defended, and mobilized in public technoscientific controversies. In the case of shale oil and gas development in the United States, activists and policy makers have demanded information about the contents of fluids used in the extraction process and the routes of oil shipments by rail. Drilling and railroad companies have resisted both demands. Studies of such disputes reveal the dynamic and conflictual nature of information disclosure. In both cases, disclosure conflicts unfold dynamically over time, reflecting power disparities between industry groups and their challengers and requiring coalitions of activists to pursue multiple tactics. When a disclosure policy is established, it does not resolve social conflict but shifts the focus of struggle to the design of information systems, the quality of disclosed data, and the knowledge gaps that are now illuminated. (shrink)

Although legitimacy theory provides strong arguments that environmental, social and governance disclosure and performance can help mitigate firm-specific risks, this relationship has been repeatedly challenged by conceptual arguments, such as ‘transparency fallacy’ or ‘impression management’, and mixed empirical evidence. Therefore, we investigate this relationship in the revelatory case of initial public offerings, which represent the first sale of common stock to the wider public. IPOs are characterised by strong information asymmetry between firm insiders and society, while at the (...) same time suffering from uncertainty in firm legitimacy, culminating in amplified financial risks for both issuers and investors in aftermarket trading. Using data from the United States, we demonstrate that voluntary ESG disclosure reduces idiosyncratic volatility and downside tail risk and higher ESG ratings have lower associated firm-specific volatility and downside tail risk during the first year of trading in the aftermarket. We provide theoretical arguments for the relationships observed, suggesting that companies striving for ESG performance and communicating their efforts signal their compliance with sustainability-related norms, thus acquiring and upholding a societal license to operate. ESG performance and disclosure help companies build their reputation capital with investors after going public. We also report that ESG disclosure is a more consistent proxy for ex-ante uncertainty as an indicator of aftermarket risk, thereby replacing some of the more conventional measures, such as firm age, offered in the existing literature. (shrink)

Corporate, Social, Ethical and Environmental Reporting should ideally discharge the accountability of an organisation to its stakeholders. Voluntary reporting has been characterised by a dearth of neutral and objective information such that the advocates of SEER recommend that it be made compulsory. Their underlying rationale is that legally specified disclosure requirements and enforcement mechanisms will enhance the quality of such reporting. This paper sets out to explore how realistic this scenario actually is, in view of the conflicting interpretations (...) in the literature on this subject. To that end, a survey of the reporting patterns of 78 of the largest Spanish companies between 2001 and 2003 examines the extent of their compliance with the ICAC-2002 standard, which obliged them to make environmental disclosures in their financial statements. The results suggest that progressive and improved regulation could increase the volume and quality of SEER disclosures. They also suggest, however, that persistent non-compliance means that the problems associated with voluntary disclosure still exist. Finally, through an impression management perspective, the study reveals, the diverse strategies, ranging from dismissal to concealment, that are employed by companies to avoid transparency. As regulation improves and enforcement expectations rise, it becomes more difficult to dismiss compulsory reporting norms. As a result, some firms engage in more complex concealment strategies to attain corporate legitimacy, depriving stakeholders of regulatory information. The latter point serves to reconcile apparently contradictory explanations in the literature as to whether legitimacy theory might explain partial compliance with SEER regulation. (shrink)