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 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)

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 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)

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)

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)

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)

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)

The aim of this paper is to analyze whether a number of firm and industry characteristics, as well as media exposure, are potential determinants of corporate social responsibility (CSR) disclosure practices by Spanish listed firms. Empirical studies have shown that CSR disclosure activism varies across companies, industries, and time (Gray et al., Accounting, Auditing & Accountability Journal 8(2), 47–77, 1995; Journal of Business Finance & Accounting 28(3/4), 327–356, 2001; Hackston and Milne, Accounting, Auditing & Accountability Journal 9(1), (...) 77–108, 1996; Cormier and Magnan, Journal of International Financial Management and Accounting 1(2), 171–195, 2003; Cormier et al., European Accounting Review 14(1), 3–39, 2005), which is usually justified by reference to several theoretical constructs, such as the legitimacy, stakeholder, and agency theories. Our findings evidence that firms with higher CSR ratings present a statistically significant larger size and a higher media exposure, and belong to more environmentally sensitive industries, as compared to firms with lower CSR ratings. However, neither profitability nor leverage seem to explain differences in CSR disclosure practices between Spanish listed firms. The most influential variable for explaining firms’ variation in CSR ratings is media exposure, followed by size and industry. Therefore, it seems that the legitimacy theory, as captured by those variables related to public or social visibility, is the most relevant theory for explaining CSR disclosure practices of Spanish listed firms. (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)

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)

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)

Corporate social responsibility (CSR) is a dramatically expanding area of activity for managers and academics. Consumer demand for responsibly produced and fair trade goods is swelling, resulting in increased demands for CSR activity and information. Assets under professional management and invested with a social responsibility focus have also grown dramatically over the last 10 years. Investors choosing social responsibility investment strategies require access to information not provided through traditional financial statements and analyses. At the same time, a (...) group of mainstream institutional investors has encouraged a movement to incorporate environmental, social, and governance information into equity analysis, and multi-stakeholder groups have supported enhanced business reporting on these issues. The majority of research in this area has been performed on European and Australian firms. We expand on this literature by exploring the CSR disclosure practices of a size- and industry-stratified sample of 50 publicly traded U.S. firms, performing a content analysis on the complete identifiable public information portfolio provided by these firms during 2004. CSR activity was disclosed by most firms in the sample, and was included in nearly half of public disclosures made during that year by the sample firms. Areas of particular emphasis are community matters, health and safety, diversity and human resources (HR) matters, and environmental programs. The primary venues of disclosure are mass media releases such as corporate websites and press releases, followed closely by disclosures contained in mandatory filings. Consistent with prior research, we identify industry effects in terms of content, emphasis, and reporting format choices. Unlike prior research, we can offer only mixed evidence on the existence of a size effect. The disclosure frequency and emphasis is significantly different for the largest one-fifth of the firms, but no identifiable trends are present within the rest of the sample. There are, however, identifiable size effects with respect to reporting format choice. Use of websites is positively related to firm size, while the use of mandatory filings is negatively related to firm size. Finally, and also consistent with prior literature, we document a generally self-laudatory tone in the content of CSR disclosures for the sample firms. (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)

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)

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)

This article examines corporate social disclosures (CSD) in an African developing economy (Mauritius) as provided in the annual reports of listed companies from 2004 to 2007. Informed by the country’s social, political and economic context and legitimacy theory, we hypothesise that the extent and variety of CSD themes (social, ethics, environment and health and safety) will be enhanced post-2004 and will be influenced by profitability, size, leverage and industry affiliation. We find a significant increase in the volume (...) and variety of CSD, although information in relation to social activities remains the most prominent form of disclosure. This is in contrast to previous studies which reported on the primacy of employee disclosures in developing countries. Using a pooled regression analysis, we also observe that size does explain variations in overall CSD and social disclosures, whilst leverage is positively related to changes in environmental and health and safety disclosures. There is no profitability relationship, and the effects of industry affiliation on CSD are non-significant or contrary to expectations. Overall, we assert that legitimacy, as a strategic and managerially driven approach favouring symbolic actions, is the prevailing motivation underlying the progression of CSD in Mauritius. (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)

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)

This study analyzes the effect of university social responsibility on environmental accounting disclosure with entrepreneur value as a moderating variable in Asean universities with the population in this study are all universities that are categorized as having a top 10 ranking based on World Class University and publish their reports with the period 2018-2021. The analysis technique used is quantitative with panel data regression analysis tools. The results of the research are (1) Enviromental Awarenes and Enterprenuer Value (...) have a positive and significant effect on Environmental Accounting Disclosures (2) Enviromental Involvement and Enviromental Reporting have a negative and significant effect on Environmental Accounting Disclosures (3) Enterprenuer Value is proven to significantly moderate the effect of university social responsibility on environmental accounting disclosures. (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)

This paper moves beyond corporate environmental disclosure (CED), and examines the concept of corporate sustainability disclosure (CSD) and CSD standards. While sustainability disclosure has been adopted by some larger firms, the majority of transnational firms do not yet participate in this process. This paper develops a framework and propositions for effective CSD standards. Consistent with general literature on standards, this study suggests that CSD standards that are broadly-focused and developed by private standard setters (e.g., GRI) hold (...) the greatest promise for widespread acceptance. Furthermore, the paper suggests that financial analysts--who provide the metrics for firm valuation—should participate in developing a universal set of CSD standards, in order to promote acceptance. (shrink)

The purpose of this study is to explore the extent and nature of sustainability disclosure practices of companies from environmentally sensitive industries in India. It further investigates the influence of potential determinants on sustainability information disclosure of the companies. The study analyzed the data of 57 energy and mining companies included in NIFTY500 index at National Stock Exchange of India (NSE) for the period 2016 to 2019. In the present study, environment, social, and governance (ESG) parameters were (...) considered to measure the corporate sustainability disclosure practices. Panel data analysis was conducted to investigate the impact of possible determinants on sustainability reporting. The results indicate that variables, such as firm size, market capitalization, and a standalone sustainability reporting, are positively associated with the sustainability information disclosure of companies. The finding also suggests that policymakers should promote a standalone sustainability reporting based on Global Reporting Initiative (GRI) standards and also broaden the existing scope of business responsibility reporting in India. Overall findings should help the policymakers and regulators to assess and advance the disclosure reforms to improve sustainability reporting in India. (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)

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)

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)

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)

The aim of this study is to analyse how secondary stakeholders influence managerial decision-making on Corporate Social Responsibility disclosure. Based on stakeholder salience theory, we empirically investigate whether differences in environmental disclosure among companies are systematically related to differences in the level of power, urgency and legitimacy of the environmental non-governmental organisations with which these companies are confronted. Using proprietary archival data for an international sample of 199 large companies, our results suggest that differences in (...) environmental disclosures between companies are mainly associated with differences between their environmental stakeholders’ legitimacy. The effects of power and urgency are of an indirect nature, as they are mediated by legitimacy. This study improves our understanding of CSR disclosure by demonstrating that, next to the well-documented effect of company characteristics, stakeholder characteristics are also important. Besides, it provides scarce empirical evidence that not only primary stakeholders, but also secondary stakeholders are influential with regards to management decision-making. And more specifically, it offers insight into why some stakeholder groups are better able to influence disclosure decisions than other. The results also have important practical implications for managers of both environmental NGOs and large companies. For managers of environmental NGOs the results provide evidence of the most successful tactics for having their environmental information demands satisfied by companies. For company management the results provide insights into the most important stakeholder characteristics, on the basis of which they may develop strategies for proactively disclosing environmental information. (shrink)

Ecological objectives in environmental reports usually promise a high degree of environmental responsibilities in a company’s activities. Several studies have already highlighted that most companies do not keep their promises since stakeholders’ expectations and a company’s capabilities for internal adjustments do not always match. Thus, a company might use strategic reporting in order not to endanger its legitimacy. However, no study so far has demonstrated how companies use different legitimacy strategies in reporting their environmental objectives over time. (...) To achieve this in our study, we focus primarily on findings from legitimacy theory in combination with the legitimacy strategies suggested by Lindblom Social and environmental accounting: developing the field, Sage, Los Angeles, pp 51–63, 2010). To test our theoretical framework empirically, we analyze 260 corporate environmental reports of German DAX companies between the years 2000–2014 by coding all disclosed objectives within these reports. Based on this longitudinal approach, we are able to identify reporting patterns of the different companies that provide insights into those companies’ environmental reporting legitimacy strategies. Overall, this study contributes to research on voluntary disclosure by showing that a comprehensive analysis of the reporting pattern of disclosed objectives allows the identification of certain legitimacy strategies. (shrink)

The main objective of this study is to understand the value of environmental, social, and governance (ESG) disclosure assurance in the context of the development of sustainable finance standards and laws. This study is based on an analysis of 188 comment letters submitted by such actors in the context of public consultations on the development of three new sustainable finance initiatives (the CFA Institute, the Financial Conduct Authority in the UK, and the New Zealand parliament). The study (...) shows these actors' nuanced and often quite critical perceptions of the effectiveness of external assurance in preventing greenwashing and their reservations about its mandatory nature. These actors have raised various criticisms, including concerns about the vagueness surrounding verification practices; the lack of expertise available to conduct assurance in a new, specialized, and complex field; the costs of the assurance process, particularly for small players; and the lack of control over the reliability of the ESG data used. This article contributes to several emerging trends in the literature—in particular, research on governance practices to prevent greenwashing, on the institutionalization of sustainable finance standards and laws, and on the role of rational myths in the assurance process for ESG disclosures. (shrink)

Self-disclosures on online social networks have received increased attention in the last two decades. Researchers from different disciplines investigated manifold influencing variables, and studies applied different theories to explain why many users share very sensitive and personal information despite potential risks and negative consequences, whereas others do not. Oftentimes, it is argued that self-disclosure decisions result from a kind of rational “calculus” of risks and benefits. However, such an assumption of rationality can and has been criticized. Nevertheless, fundamental (...) cognitive and affective mechanisms that underlie self-disclosure decision making on social networks are still under-explored. By building upon previous self-disclosure theories and models, dual-and tripartite-system perspectives of decision making, and former empirical findings, we propose a Tripartite Self-Disclosure Decision model that conceptualizes inner processes of online self-disclosure decision making. Central to this model is the proposed interaction of three neural and cognitive/affective systems: a reflective, an impulsive, and an interoceptive system. We further highlight individual and environmental features, which can impact individuals’ online self-disclosure decisions by influencing the proposed inner decision-making processes targeting the aforementioned three systems. Possible short- and long-term consequences are also discussed, which in turn can affect certain model components in subsequent self-disclosure decision situations. By taking such a neurocognitive perspective, we expand current research and models, which helps to better understand potentially risky information sharing on online social networks and can support attempts to prevent users from incautious self-disclosures. (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 examines the effects of environmental factors on the ethical behavior of managers using computers at work in Mainland China. In this study, environmental factors refer to senior management, peer groups, company policies, professional practices, and legal considerations. Ethical behaviors include attitudes to disclosure, protection of privacy, conflict of interest, personal conduct, social responsibility, and integrity. A questionnaire survey was used for data collection, and 125 mainland Chinese managers participated in the study. The results show (...) that peer groups, professional practices, and legal considerations do influence the ethical behavior of mainland Chinese managers in the areas of social responsibility, integrity, and accountability. A discussion of the implications of the results is also provided in this paper. (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)

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)

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)

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)

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)

There is a growing global interest in social responsibility and sustainability across all sectors. Other than economic performance, stakeholders are now also concerned about the social and environmental impacts of corporations. Additionally, stakeholders are obtaining a higher salience level and expect organisations to operate sustainably. The banking sector has not been an exception, as banks can have significant impact on their customers, employees, and society in various ways. Given the intertwined links of Islam and ethical principles, it (...) is expected that Islamic banks will show a high level of commitment towards social responsibility (SR) and ethical practices. The current study investigates this issue by examining the annual reports of three fully-fledged Islamic commercial banks in Indonesia over the period of 2007 to 2011. It was found that only two of the investigated banks had continuous improvement in their SR disclosure. Additionally, it was revealed that the highest disclosures have been for ‘corporate vision’ and ‘board of directors and top management’, while the lowest disclosures were evident for ‘environment’ and ‘product, services and fair dealing with supply chain’. (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)

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)

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)

We theorize that social media will reduce the incidence of corporate greenwash. Drawing on the management literature on decoupling and the economic literature on information disclosure, we characterize specifically where this effect is likely to be most pronounced. We identify important differences between social media and traditional media, and present a theoretical framework for understanding greenwash in which corporate environmental communications may backfire if citizens and activists feel a company is engaging in excessive self-promotion. The framework (...) allows us to draw out a series of propositions regarding the impact of social media on corporate decisions whether to greenwash, and what channels to use for environmental communication. We conclude with a number of suggestions for future research. (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)

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)

Social screening of investments calls not only for investment policy and criteria, but also for information about companies, their policies, practices and performance. The Global Reporting Initiative (GRI) and its June 2000 Sustainability Reporting Guidelines have the potential to significantly improve the usefulness and quality of information reported by companies about their environmental, social and economic impacts and performance. The GRI aims to develop a voluntary reporting framework that will elevate sustainability reporting practices to a level equivalent (...) to that of financial reporting in rigour, comparability, auditability and general acceptance. This will be a welcome and efficient supplement to the questionnaires, interviews, press releases, media reports and other sources of information traditionally used for screening in investment decision making - social/ethical and mainstream. The Dow Jones Sustainability Group Index, the Jantzi Social Index and the Innovest EcoValue'21 analytical platform, together with the SRI community, are all likely to benefit from GRI-style sustainability reports. One of the GRI's key challenges is to accommodate the broad variety of disclosure needs and expectations of a wide range of report users and company stakeholders. To maximize the usefulness of the GRI Guidelines, report users, including the SRI community, need to be engaged in the process of developing and refining the Guidelines over time. The GRI Guidelines are emerging as an important instrument in enabling companies to communicate with their stakeholders about performance and accountability beyond just the financial bottom line. (shrink)

This article investigates whether sustainability labels for mutual funds in Europe provide consistent signals regarding funds’ sustainable characteristics. Specifically, we assess the alignment of signals conveyed by third-party and self-declared labels. Among the first typology, we consider labels sponsored by government and nonprofit organizations (GNPOs) alongside Environmental, Social, and Governance (ESG) ratings from commercial data vendors. The latter category includes the Sustainable Finance Disclosure Regulation (SFDR) classification and an ESG-related name. Our findings indicate that equity funds with (...) GNPO labels are more likely to exhibit top-tier ESG ratings and alignment with self-declared sustainability signals, namely Article 9 of SFDR and fund names. Furthermore, holding government and multiple GNPO labels is linked to other signals indicating higher sustainability standards. In addition, funds tend to experience an improvement in Morningstar globes after receiving a GNPO label, consistent with GNPO labels signaling funds of the high-quality type. The results regarding label alignment in fixed-income funds are less conclusive. Our findings underscore the need for credible signals in view of the growing number of sustainability labels available to investors. (shrink)