Environmental disclosure quality and risk: the moderating effect of corporate governance

Abstract

Purpose The purpose of this article is to investigate the relationship between environmental disclosure quality (EDQ) and risk and to further examine whether corporate governance (CG) practices moderate this relationship. Design/methodology/approach This study uses a set of unique, hand collected data (from 2011 to 2016) to measure EDQ for a sample of 762 firm-years Iranian listed companies. Ordinary least squares regression analysis is performed in testing hypotheses after controlling for a variety of firm, industry and year effects. Moreover, several analyses are performed to establish the robustness of the findings. Findings The results indicate a negative association between EDQ and firm risk. While board independence moderates this relationship, other CG practices such as CEO duality and board size do not show any effects on the relationship between EDQ and risk. The results remain robust after performing sensitivity tests and under various specifications, including the fixed-effects panel data and Heckman two-stage regressions. Research limitations/implications Results are from a sample of firms from one country. Practical implications The results have implications for policymakers, legislators and corporate executives, as environmental initiatives are gaining more attention worldwide. Social implications Sustainability initiatives in the areas of environmental and social performance and disclosure are gaining global attention. This study addresses the link between firm risk and EDQ. Originality/value This study contributes to the literature by shedding light on the relationship between corporate risk-taking and EDQ in the context of a developing economy.

The effects of business ethics and corporate social responsibility on intellectual capital voluntary disclosure

“…For example, Rezaee et al (2020) have stressed the promotion of ethical standards within the company to improve the quality of disclosed information. Indeed, it has been recently discovered that the companies envisaging to promote ethical behaviors are called upon to adopt a rather intensive disclosure policy regarding their IC characteristics: in other words, the quality of disclosed information about IC contributes to outline the social legitimacy (Slack and Munz, 2016).…”

Does adoption of ISO 56002‐2019 and green innovation reporting enhance the firm sustainable development goal performance? An emerging paradigm

“…The increasing awareness and concern for the environment and societal impact (Debnath, 2020) from business practices (Svensson et al, 2011) in addition to the impact of social and environmental challenges on the bottom line of businesses has escalated the concern of senior management to manage their business and social effects actively (Abdul‐Rashid et al, 2017). Environmental disclosure and reporting have been researched by various authors linking firm ownership (Dintimala & Amril, 2018), size (Phoprachak & Buntornwon, 2020), corporate governance attributes (Campanella et al, 2021; Gerged, 2021; Rezaee et al, 2020; Zahid et al, 2020), and other related challenges. Also, during the past few decades, the growing interest and attention towards studying the aspects associated with reporting and the demand from stakeholders (Sutantoputra, 2021) have prompted policymakers to encourage companies to publish and disclose their business activities in their sustainable report each year.…”

“…Buntornwon, 2020), corporate governance attributes (Campanella et al, 2021;Gerged, 2021;Rezaee et al, 2020;Zahid et al, 2020), and other related challenges. Also, during the past few decades, the growing interest and attention towards studying the aspects associated with reporting and the demand from stakeholders (Sutantoputra, 2021) have prompted policymakers to encourage companies to publish and disclose their business activities in their sustainable report each year.…”

To What Extent does CEO Behavior Enhance Risk-Taking? A Banking Sector Related Evidence

“…Proponents of CEO duality argue that the CEO should balance or equate between the supervisory role and the administrative function, by acting as a reference between the executive and the board, thereby, guaranteeing the long-term well-being of the CEO and the council's board chair. In effect, the firm would rather align management interests with shareholder interests (Rezaee et al, 2020). Simultaneously, CEO duality would also tend to have a special effect on the overall risk taking policy.…”