Testing social and environmental disclosure-reputation relationship: a longitudinal two-way analysis

Abstract

Purpose This paper aims to review sustainability reporting understood as any type of social and environmental disclosures (SED) in its relationship with corporate reputation within the most reputed companies in Spain according to MERCO business monitor ranking (2014-2016). Design/methodology/approach To shed light on the relationship reputation-SED, two alternative models were tested, thought the use of structural equation model (SEM) and partial least squares (PLS), with longitudinal data. Findings Both models supported the hypotheses although the model linking reputation to SED was slightly better, questioning the use of SED by reputation leader companies. Research limitations/implications The paper study the linkage, sign and causality, between reputation and SED by introducing two alternative models. SED and reputation are receiving considerable attention into the business scope, although their relationship is not agreed by previous literature. There are contradictory evidences that lead us to question the sense of this relation. Practical implications The contribution will be of interest to managers in terms of the value of this type of reporting from a strategic point of view. If reputation favours this type of disclosures, these will be issues to be taken into account to obtain a better competitive advantage through market differentiation. Social implications The results will be of interest for future studies and actions aimed at regulating the improvement of this type of reporting not only in the hands of academics and practitioners but also investors and regulators. Originality/value This study is an advance in the description of the SED-reputation relationship and contributes to this new line of research with new insights. Another contribution is the way to understand sustainability reporting. This paper analyses SED from the twofold point of view of the quantity of information and, the existing references about its quality and adding the lag effect between both variables.

Corporate climate‐related voluntary disclosures: Does potential greenwash exist among Australian high emitters reports?

“…This finding is consistent with prior studies that claim underperforming companies tend to disclose environmental information extensively (Cho et al, 2006; Dawkins & Fraas, 2011; De Villiers & van Staden, 2006; Fontana et al, 2015) as a means to lessen legitimacy threats (Cowan & Deegan, 2011; Deegan et al, 2002; Deegan & Rankin, 1996; Haque & Deegan, 2010; O'Donovan, 2002; Patten, 2002b; Perera et al, 2019). This greenwashing practice may be undertaken to change perceptions of their public image and reputation (Castilla‐Polo & Sánchez‐Hernández, 2020; Clarkson, Overell, & Chapple, 2011) or divert public attention from unfavourable issues (Chatterjee & Zaman Mir, 2008; Deegan & Rankin, 1996; Nazli Nik Ahmad & Sulaiman, 2004). From a theoretical perspective, this finding is consistent with the prediction of socio‐political theories.…”

“…In response, some corporations may resort to greenwashing to demonstrate a positive image of their environmental performance in the absence of regulatory regimes that hold them accountable. Inferior environmental performers may disclose positive environmental information to influence negative perceptions about their poor environmental performance (Castilla‐Polo & Sánchez‐Hernández, 2020; Clarkson et al, 2008).…”

Intellectual capital as a predictor of cooperative prominence through human capital in the Spanish agrifood industry

“…But what indicates that a cooperative is competitive in its market? Without underestimating other signs and evidence of competitive success, we will focus on three unquestionable facts: the best cooperatives in the market are responsible, innovative and possess technological resources; they benefit from satisfactory image and reputation and they have high performance (Castilla-Polo et al, 2017Castilla-Polo and S anchez-Hern andez, 2020b).…”

Guest editorial

“…The interest on exploring disclosure when it comes to ethics, CSR and sustainability is also the basis for the study of Castilla-Polo and Sánchez-Hernández (2020), who test the social and environmental disclosure–reputation relationship in the Spanish context. Corporate social and environmental disclosure is frequently related to increased corporate reputation, but recent research on social and environmental disclosure and reputation suggests it is a complex relationship, with contradictory evidence regarding the causality between the variables.…”

“…Corporate social and environmental disclosure is frequently related to increased corporate reputation, but recent research on social and environmental disclosure and reputation suggests it is a complex relationship, with contradictory evidence regarding the causality between the variables. The recognition of this contradictory evidence was the starting point for a longitudinal study by Castilla-Polo and Sánchez-Hernández (2020), where the authors have examined the linkage, sign and causality between reputation and social and environmental disclosure. Adopting an innovative approach, the authors considered both the quantity and the quality of reporting and introduced two alternative causal models regarding the reputation–social and environmental disclosure relationship.…”