An Empirical Examination of Factors Affecting the Timing of Environmental Accounting Standard Adoption and the Impact on Corporate Valuation

Li, Yue; McConomy, Bruce J.

doi:10.1177/0148558x9901400307

Cited by 93 publications

(67 citation statements)

References 18 publications

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“…Indeed, despite some studies that report that a signifi cant association between a company's profi tability and its level of environmental information disclosure does not exist (Hackston and Milne, 1996;Moneva and Llena, 1996;Choi, 1999;Archel and Lizarraga, 2001;Archel, 2003;Stanny and Ely, 2008), there are a few studies that have demonstrated the existence of a positive relationship between the two variables (Li and McConomy, 1999;Neu et al, 1998).…”

Section: Profi Tability (Prof)mentioning

confidence: 99%

Determinants of environmental disclosure in the annual reports of large companies operating in Portugal

Monteiro

Guzmán

2010

Corp Soc Responsibility Env

314

152

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Similarly to what has happened in other countries, since the early 1990s Portuguese companies have developed corporate environmental reporting practices in response to internal and external factors. This paper is based on empirical research directed to both the study of environmental reporting practices developed by Portuguese companies and the identification of the factors that explain the extent to which these companies disclose environmental information. This study focuses on the environmental disclosures made in the annual reports by a sample of 109 large fi rms operating in Portugal during the period 2002-04. Using the content analysis technique we have developed an index in order to assess the presence of the environmental disclosures in companies' annual reports and their breadth. Based on the extant literature, several characteristics relating to fi rms' attributes were selected and their infl uence on the level of environmental disclosure was tested empirically. The selected explanatory variables were fi rm size, industry membership, profi tability, foreign ownership, quotation on the stock market and environmental certifi cation. The results reveal that, in spite of the fact that the level of environmental information disclosed during the period 2002-04 is low, the extent of environmental disclosure has increased as well as the number of Portuguese companies that disclose environmental information. Moreover, the fi rm size and the fact that a company is listed on the stock market are positively related to the extent of environmental disclosure. This study adds to the international research on environmental disclosure by providing empirical data from a country, Portugal, where empirical evidence is still relatively unknown, extending the scope of the current understanding of the environmental reporting practices.

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Section: Profi Tability (Prof)mentioning

confidence: 99%

Determinants of environmental disclosure in the annual reports of large companies operating in Portugal

Monteiro

Guzmán

2010

Corp Soc Responsibility Env

314

152

View full text Add to dashboard Cite

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“…Downing, 1997;Cormier, Aerts, Ledoux and Magnan, 2009;Richardson and Welker, 2001) and environmental disclosure (e.g. Cormier, Magnan and Morard, 1993;Barth and McNichols, 1994;Li and McConomy, 1999;Aerts, Cormier and Magnan, 2008) affect investors" appreciation of a firm"s underlying risk. For example, Cormier, Ledoux and…”

Section: Hypothesesmentioning

confidence: 99%

“…Downing, 1997;Cormier, Aerts, Ledoux and Magnan, 2009) and environmental disclosure (e.g. Cormier, Magnan and Morard, 1993;Barth and McNichols, 1994;Li and McConomy, 1999;Aerts, Cormier and Magnan, 2008) convey value-3 relevant information to investors. However, such evidence is not conducive to the development of efficient disclosure practices since it is likely that there is much overlap in the strategies underlying a firm"s social and environmental actions and performance.…”

mentioning

confidence: 99%

The informational contribution of social and environmental disclosures for investors

Cormier

Ledoux

Magnan

2011

Management Decision

308

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Corporations increasingly define their social and environmental initiatives and activities as part of their Corporate Social Responsibility (CSR). Disclosure practices have followed suit as well with social and environmental information typically being combined, often through a CSR report. The emergence of CSR is a response to the demands of activist investors, ethical and green institutional investors as well as rating services (e.g., Jantzi) which evaluate corporations through the lens of CSR, thus going beyond traditional environmental indicators. However, is this trend beneficial to investors? We investigate whether social disclosure and environmental disclosure substitute or complement each other in reducing information asymmetry between managers and investors, taking into account a firm"s environmental performance and governance attributes. Our findings suggest that social disclosure and environmental disclosure substitute each other in reducing stock market asymmetry, as proxied by share price volatility. Our results also show that the reduction in share price volatility is higher for economic (hard) environmental disclosure than for generic (soft) environmental disclosure. Hence, future research in CSR disclosure may fruitfully distinguish between social and environmental disclosures as well as between hard (economic-based) and soft environmental information.Key words: Environmental disclosure, governance attributes, information asymmetry, social disclosure. However, most voluntary disclosure guidelines (e.g., Global Reporting Initiative or GRI)as well as most prior research view corporate social responsibility (CSR) disclosure as an additive process where more is better (e.g., Ingram, 1978;Patten, 1991). In other words, it is assumed that more social and environmental disclosure benefits the disclosing firm as well as its shareholders. There is anecdotal and empirical evidence that, on their own, both social disclosure (e.g. Downing, 1997;Cormier, Aerts, Ledoux and Magnan, 2009) and environmental disclosure (e.g. Cormier, Magnan and Morard, 1993;Barth and McNichols, 1994;Li and McConomy, 1999;Aerts, Cormier and Magnan, 2008) convey value-3 relevant information to investors. However, such evidence is not conducive to the development of efficient disclosure practices since it is likely that there is much overlap in the strategies underlying a firm"s social and environmental actions and performance. Moreover, despite the growth and development of CSR disclosure by many organisations, it is still relatively unknown as to how investors interpret social and environmental disclosures together. Moreover, it is still uncertain as to how investors integrate a firm`s CSR performance into their assessment of CSR disclosure.In this study, we investigate whether social disclosure and environmental disclosure substitute or complement each other in reducing information asymmetry between managers and investors, taking into account a firm"s environmental performance and governance attributes.Our study focuses on a sample...

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“…A large body of accounting research shows that corporate disclosure of environmental information is likely to be strategic, consistent with either voluntary disclosure theory or the legitimacy theory (Li, Richardson, and Thornton 1997;Barth, McNichols, and Wilson 1997;Wiseman 1982;Patten 1992Patten , 2002Cho and Patten 2007;Cho, Guidry, Hageman, and Patten 2012;Neu, Pedwell, and Warsame 1998;Clarkson, Li, Richardson, and Vasvari 2008;Clarkson, Fang, Li, and Richardson 2013). In addition, many studies provide empirical evidence that corporate environmental performance information in various industrial settings is valuation relevant (Barth and McNichols 1994;Cormier and Magnan 1997;Hughes 2000;Johnson, Sefcik, and Soderstrom 2008;Li and McConomy 1999;Clarkson, Li, Pinnuck, and Richardson 2015;Clarkson, Li, and Richardson 2004;Matsumura, Prakash, and Vera-Muñoz 2014;Schneider 2011). Similarly, there is ample empirical evidence that variation in corporate environmental performance affects the behavior of a wide range of capital market participants, including creditors, shareholders, analysts, and managers.…”

Section: Introductionmentioning

confidence: 82%

An Empirical Examination of Factors Affecting the Timing of Environmental Accounting Standard Adoption and the Impact on Corporate Valuation

Cited by 93 publications

References 18 publications

Determinants of environmental disclosure in the annual reports of large companies operating in Portugal

Determinants of environmental disclosure in the annual reports of large companies operating in Portugal

The informational contribution of social and environmental disclosures for investors

What Is Corporate Sustainability and How Do Firms Practice It? A Management Accounting Research Perspective

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