Determinants of Corporate Climate Change Disclosure for European Firms

Abstract

This study identifies the determinants of climate change disclosure under the prism of sustainable development in European context. The selected variables involve environmental performance, ownership structure, and verification of climate change initiatives. Cross‐sectional data derived from the Bloomberg terminal of the European 500 index concerning 215 firms in the year 2014 are employed. The novelty of the present study stands on the use of proxies for climate change disclosure by adopting the Climate Performance Leadership Index (CPLI). The results reveal that better environmental performance positively affects the level of climate change disclosure. In addition, governmental ownership and independent verification of environmental data determine climate change disclosure. Thus, climate change disclosure is thought to be an effective managerial tool for shareholders and stakeholders to superintend corporate management limiting information asymmetry level; furthermore, higher environmental performers prefer actual climate change disclosure providing a plausible signal. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Sustainable development and corporate governance in the financial system: Are environmentally friendly banks less risky?

“…Giannarakis, Zafeiriou, Arabatzis, and Partalidou (2018) argue that climate change disclosure is an effective tool to limit information asymmetry for shareholders and stakeholders. Giannarakis, Zafeiriou, Arabatzis, and Partalidou (2018) argue that climate change disclosure is an effective tool to limit information asymmetry for shareholders and stakeholders.…”

“…The 1995 Kyoto Protocol and, more recently, the Paris Conference (2015) confirm the importance ascribed to this theme worldwide. Giannarakis, Zafeiriou, Arabatzis, and Partalidou (2018) argue that climate change disclosure is an effective tool to limit information asymmetry for shareholders and stakeholders. Prior literature recognizes environmental protection as a pillar of CSR (Renneboog et al, 2008).…”

Impact of climate change mitigation policies on corporate financial performance: Evidence‐based on European publicly listed firms

“…The investigation, its connection with the agency theory, and the approach adopted to evaluate the fallout of carbon emissions on financial performance of firms enrich the existing empirical and methodological evidence (Eisenhardt, 1989;Giannarakis, Zafeiriou, Arabatzis, & Partalidou, 2018;Holmstrom & Milgrom, 1991;Hopwood, 1972).…”

Environmental Disclosure: Determinants and Effects on Financial Performance? An Empirical Evidence from Turkey

“…Hackston & Milne, 1996;Cormier & Gordon, 2001;Brammer & Pavelin, 2008;Liu & Anbumozhi, 2009;Sun et al, 2010;Clarkson et al, 2011;Zeng et al, 2012;Sulaiman et al, 2014;Juhmani, 2014;Akrout & Othman, 2016;Yildiz et al, 2016;Welbeck et al, 2017;Vogt et al, 2017;Deswanto & Siregar, 2018;Kolsi & Attayah, 2018;Kılıç & Kuzey, 2019). However, some studies found that increases in profitability contribute to more transparency in environmental issues (Pahuja, 2009;Setyorini & Ishak, 2012;Singhania & Gandhi, 2015;Braam et al, 2016;Ahmadi & Bouri, 2017;Giannarakis et al, 2017;Ismail et al, 2018;Elshabasy, 2018;Kouloukoui et al, 2019;Wang & Zhang, 2019). The reason for the positive relation between profitability and environmental disclosure is that more profitable firms have more ability to fund the costs of environmental reporting (Freedman & Jaggi, 2005: 221;Brammer & Pavelin, 2006: 1174Andrikopoulos & Kriklani, 2013: 59).…”