Influence of political connections on the disclosure of social and environmental information

Abstract

Objective: To analyze the influence of political connections on the disclosure of social and environmental information. Method: The survey sample is composed of 370 companies listed on B3. To determine the level of socio-environmental disclosure, the sustainability reports for 2016 were analyzed, based on the guidelines of the Integrated Report (IR). As for the political connections, the existence of political or government shareholding in companies was analyzed, as well as the donations made by the companies to the electoral campaigns, both in 2014. Originality / Relevance: The discussion in the national academic environment about the reflexes caused by the connections established between companies and government, especially considering the socio-environmental disclosure as the affected side, is still incipient. Results: The results do not allow to assess the real effect of the political connections on the socio-environmental disclosure index, but there are indications of a negative influence in this scope. The influence of size, company participation in the ISE portfolio and the company's performance in a regulated segment, on the level of social and environmental disclosure, are explained by the Theory of Legitimacy. Theoretical/methodological contributions: There are indications that, in Brazil, the effect of political connections on socioenvironmental disclosure may be negative, due to the weak institutional environment, with deficient rules and regulations. It is important to pass on this information, given the growing economic, social and environmental impact of companies in the region in which they operate and in society.

Os Escândalos De Corrupção Na JBS S.A. E As Estratégias De Legitimidade Organizacional De Lindblom

“…Corruption has played an important role in scientific, political and economic debates worldwide (Garcia & Theodosius, 2020). In the corporate context, several publications have analyzed the relationship between the company's reputation and the contents of social and environmental reports (e.g., Koprowski et al, 2019;Odriozola & Baráibar-Diez, 2017). Other types of reports can also be included when addressing, for example, the image of a "corrupt" company and its relationship with interest groups (e.g., Barros, Rodrigues, & Panhoca, 2019;Etxeberria & Odriozola, 2017).…”

“…Sancovschi and Silva (2006) described how Petrobras managers voluntarily disclosed social information in its annual reports from 1993 to 2002 to address negative aspects of its activities that could threaten its legitimacy. Koprowski et al (2019) focused on the socio-environmental aspects of reports from 370 companies listed on B3; they found that the weak institutional environment in Brazil, with deficient rules and regulations, favors corporate interests and political connections between companies and the government.…”

“…As a country with high levels of corruption and with weaknesses in its legal system, Brazil provides a low level of guarantees to private investors (Koprowski et al, 2019). Because of this and the organizations' concern to show themselves aligned with the society's values, financial disclosure is a strong instrument of legitimacy (Etxeberria & Odriozola, 2017).…”

“…Over two-thirds of the countries, including Brazil, have faced a high level of corruption as engaged in by political, economic and bureaucratic elites (Garcia & Theodosius, 2020). Coupled with the legal weaknesses of emerging democracies, this level results in low guarantees for private investors (Barros, Rodrigues, & Panhoca, 2019;Koprowski et al, 2019). In Brazil, the corruption probe Operação Lava Jato [Operation Car Wash] has since 2014 pointed to the involvement of important civil construction companies in corruption scandals.…”

“…The assumption underlying this study is that research on companies engaged in fraudulent schemes is likely to provide answers to some questions related to the complex organizational behavior (Ozili, 2020). Studies addressing such questions are based, among others, on the Legitimacy Theory (e.g., Campbell, 2003;Koprowski et al, 2019). However, few studies, such as Archel et al (2009), have sought to identify the use of legitimacy strategies in the light of the political environment.…”