Do boards practice what they preach on nonfinancial disclosure? Evidence from China on corporate water information disclosures

Liu, Chengyun; Su, Kun; Zhang, Miaomiao

doi:10.1108/cafr-07-2022-0080

Cited by 8 publications

(5 citation statements)

References 101 publications

(270 reference statements)

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“…In addition, market participants such as financial analysts have environmental information interpretation capabilities, suspecting disclosures that are inconsistent with a company's actual environmental performance (Cormier & Magnan, 2015; Tsang et al, 2023). Therefore, we argue that rational firms would rather disclose environmental information relative to their actual environmental performance than implement green washing at the risk of being accused “liar” or “breaking their word.” Liu, Su, and Zhang (2023) provided direct and supportive evidence that female directors' words and deeds are consistent in voluntary water information disclosure; specifically, firms with better actual water performance disclose more water information. Lemma et al (2019) also find that firms with higher carbon risk tend to provide high‐quality carbon information and indicate their possible high carbon risk to avoid negative market reactions caused by withholding carbon information.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Notably, managers may deliberately release exaggerated or even fabricated environmental information to create an environmentally friendly public image to deceive stakeholders and obtain a certain benefit, that is, "green washing" (Liu, Su, & Zhang, 2023). Green washing has attracted much attention, and there are widespread doubts about the underlying motivation and information authenticity of environmental disclosure (Pope & Waeraas, 2016).…”

Section: The Effect Of Corporate Water Information Disclosurementioning

confidence: 99%

“…The meeting noted that low‐, middle‐, and high‐income countries showed signs of water‐related risks (UN‐Water, 2023). As an indispensable production resource for almost all companies, water resources are closely related to the sustainable development of society and the survival of companies, especially for manufacturing, animal husbandry, food, and other water‐consuming industries; water supply directly affects their output and future development (Liu, Su, & Zhang, 2023; Zeng et al, 2020). According to UN‐Water data, 2.3 billion people currently live in water‐scarce countries, of which 733 million live in countries with high and severe water shortages.…”

Section: Introductionmentioning

confidence: 99%

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Water risk and financial analysts' information environment: Empirical evidence from China

Liu,

Zhou,

et al. 2023

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We examined the relationship between water risk and the information environment of financial analysts using data from Chinese listed companies from 2010 to 2020. We theorized that corporate water risk deteriorates analysts' information environment by affecting operational and financial uncertainty and corporate legitimacy. Specifically, we found that corporate water risk is associated with higher analyst forecast errors and analyst forecast dispersion and lower analyst following. This relationship weakens with corporate water information disclosure and strengthens with the environmental attention of local governments. Furthermore, we explored the impact of corporate water risk on financial risk and future financial performance and discovered that water risk increases corporate financial risk and reduces future earnings. This suggests that corporate nonfinancial risk may also include subtle financial risk, and current water risk has a certain predictive effect on future earnings, which is an interesting finding. Our results are robust to a range of tests, including instrumental variable, generalized method of moments estimates, propensity score matching, and alternative measures of analysts' information environment. Generally, our study provides insights into the complementary role of nonfinancial risks represented by water risk in understanding financial risk and has important implications for academia and practitioners in understanding the economic consequences of corporate water risk.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: The Effect Of Corporate Water Information Disclosurementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Water risk and financial analysts' information environment: Empirical evidence from China

Liu,

Zhou,

et al. 2023

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“…Christ & Burritt, 2017aRussell, 2021). This reluctance to disclose water information might result from a range of inherent limitations, such as the ambiguity of key water concepts (Hewawithana et al, 2023), the lack of interest from large shareholders (Wicaksono et al, 2024) and communities (Egan et al, 2015), the concern about the authenticity of water data that may result in accusations of greenwashing (Liu et al, 2022), the necessity of embracing an effective interdisciplinary team Tingey-Holyoak & Pisaniello, 2019), and the disparity of water accounting frameworks available (Tingey-Holyoak & Pisaniello, 2019). So, wouldn't accounting contribute to the standardization and reporting of water information, given its role in reporting financial and non-financial information for more accurate decision-making?…”

Section: Corporate Water Reportingmentioning

confidence: 99%

Water Accounting

Meurer,

Michael van Bellen

2024

Rev. Cat. Cien. Cont.

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The urgent solutions required to avoid the increasingly frequent floods and droughts and many other issues regarding water access and management made water a subject that has attracted the attention of many – as they did with accounting professionals. Since businesses are among the largest consumers of freshwater worldwide, corporate engagement with water issues is required to safeguard the organization’s license to operate. Corporate Water Accounting then allows companies to determine the impacts of their water use and discharges on communities and ecosystems, evaluate their water-related material risks, track the effects of changes in their water management practices, and credibly report them to their stakeholders. Therefore, this theoretical essay addresses water issues within the accounting field by recognizing three interrelated approaches that drive corporate water accounting implementation - Water Risk, Water Resources Management, and Water Reporting. We acknowledge its concepts, some useful tools, and its most concerning challenges while tracing its current state, especially in Brazil, and our future expectations for water accounting development. Furthermore, based on the theoretical contributions discussed, we point out some challenges managers face and future research opportunities. We expect more accounting professionals and researchers to engage with corporate water accounting to overcome the gaps that challenge the field's development.

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“…As part of its corporate social responsibility, the building sector often prioritizes climate change (Soares, 2022). Environmental concerns, particularly those related to water, have become a major barrier to sustainability and have drawn a lot of attention in recent years (Liu, Kim, et al, 2022; Liu, Su, & Zhang, 2022).…”

Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%

The impact of green innovation on sustainability and financial performance: Evidence from the Jordanian financial sector

Srouji,

Hamdallah,

Al‐Hamadeen

et al. 2023

Bus Strat Dev

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The purpose of this study is to examine the relationship between sustainability performance (SP) and financial performance (FP), based on performance disclosures (reporting) of the Jordanian financial sector for the period of 2017–2020. The study employs green innovation (GI) indicators as moderating and mediating variables; by using hierarchical regression; as means of unlocking and examining the relationship between SP and FP; through the lens of the stakeholder theory. The hierarchical regression findings suggest that GI indicators partially mediate the relationship between SP and FP, but do not demonstrate a moderating effect. As a main result, it is indicated that Jordanian financial institutions may use SP transparency indicators as an incentive variable, which could influence their overall FP. The research also contributes to the existing literature by adding insight into the use of GI indicators in a developing country and the potential impact on financial institutions markets. These findings lend empirical credence to the generally held belief that increase disclosure benefits for both internal and external users.

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Do boards practice what they preach on nonfinancial disclosure? Evidence from China on corporate water information disclosures

Cited by 8 publications

References 101 publications

Water risk and financial analysts' information environment: Empirical evidence from China

Water risk and financial analysts' information environment: Empirical evidence from China

Water Accounting

The impact of green innovation on sustainability and financial performance: Evidence from the Jordanian financial sector

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