Industries Regulation and Firm Environmental Disclosure: A Stakeholders’ Perspective on the Importance of Legitimation and International Activities

Abstract

The potential negative environmental consequences of the activities of international firms has been scrutinized. In response to these pressures, international firms have started to disclose (voluntarily or not) environmental information in order to increase transparency and ensure legitimacy. While several factors have been pointed out as the drivers of such disclosing behavior, the role of industrial regulation has remained underesearched. To better understand this challenge, we rely on a sample of 1,150 international firms (top vs. nontop) worldwide from regulated and unregulated sectors. Our results suggest that unregulated firms disclose-to cope with higher stakeholders pressures-more environmental information than firms operating in regulated environments. Additionally, a firm's international position positively influences its environmental disclosure, but it does negatively and partially moderate the relationship between industrial regulation of the sector in which the firm operates and such firm's environmental disclosure. Our findings may also entail interesting contributions both for practitioners and scholars.

The effects of corporate governance on environmental sustainability reporting: empirical evidence from South Asian countries

“…Moreover, home (or foreign) countries' legal and ethical regulations also influence their legitimization with foreign (or home) countries' social values and expectations (Faller and Zu Knyphausen-Aufseß 2016). Additionally, foreign investors concerned with environmental issues will influence domestic companies' management to comply with environmental regulations and disclose more ESRP information to minimize political costs (Gamerschlag et al 2011;Delgado-Márquez et al 2016).…”

Is Green Regulation Effective or a Failure: Comparative Analysis between Bangladesh Bank (BB) Green Guidelines and Global Reporting Initiative Guidelines

“…Moreover, organizations work in a challenging and competitive environment and receive significant pressures from strong environmental groups investing in environmental projects [13]. Furthermore, strong national and international environmental groups, international donor agencies, and funding organizations encourage organizations to invest in the area of environmental pollution, environmental innovation, green products, environmental management system, and appropriate utilization of natural resources [7,9,12]. As a result of multi-stakeholder pressures, banking companies are reporting more green information and launching more green products to protect their investment and reputation as well as to improve customer satisfaction.…”

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“…Therefore, the organization's disclosure practices have a potential to create value to society. By disclosing economic, environmental, and social information, the organization may communicate with different types of potential parties including suppliers, creditors, activist groups, the government, the media, customers as well as the general public [3,29,38,39]. According to the signaling theory, sustainability disclosure sends different signals to the market and receives responses back from the market.…”