بازبینی رابطه بین عملکرد محیطی و افشای محیطی : تجزیه و تحلیل تجربی

Previous empirical evidence provides mixed results on the relationship between corporate environmental performance and the level of environmental disclosures. We revisit this relation by testing competing predictions from economics based and socio-political theories of voluntary disclosure using a more rigorous research design. In particular, we improve on the prior literature by focusing on purely discretionary environmental disclosures and by developing a content analysis index based on the Global Reporting Initiative sustainability reporting guidelines to assess the extent of discretionary disclosures in environmental and social responsibility reports. This index better captures firm disclosures related to its commitment to protect the environment than the indices employed by prior studies. Using a sample of 191 firms from the five most polluting industries in the US, we find a positive association between environmental performance and the level of discretionary environmental disclosures. The result is consistent with the predictions of the economics disclosure theory but inconsistent with the negative association predicted by socio-political theories. Nevertheless, we show that socio-political theories explain patterns in the data (“legitimization”) that cannot be explained by economics disclosure theories.

An unresolved research issue in environmental accounting is the empirical association between the level (i.e., amount) of corporate environmental disclosures and corporate environmental performance (Al-Tuwaijri et al., 2004, Hughes et al., 2001 and Patten, 2002). Accounting standard setters and securities regulators are increasingly being made aware of deficiencies in corporate environmental disclosures (Beets and Souther, 1999, Chan-Fishel, 2002 and Franco, 2001). The results of previous studies on the relation between corporate environmental performance and environmental disclosure in financial reports have been mixed. Patten (2002) attributes the failure to find a significant and consistent relation between environmental performance and environmental disclosure to problems in the research designs of existing research. These problems include failure to control for other factors associated with the level of environmental disclosure, inadequate sample selection, and inadequate measures of environmental performance and disclosure. This study seeks to revisit the relation between environmental performance and the level of environmental disclosure using a more rigorous research design. We test two competing predictions about the level of voluntary environmental disclosures. Voluntary disclosure theory (Dye, 1985 and Verrecchia, 1983) predicts a positive association between environmental performance and the level of discretionary environmental disclosure. The notion is that superior environmental performers will convey their “type” by pointing to objective environmental performance indicators which are difficult to mimic by inferior type firms. Inferior performers will choose to disclose less or to be “silent” on their environmental performance, thus being placed in a pool of firms where investors and other users ascribe the “average type” to that pool. What sustains this partial disclosure equilibrium is proprietary costs associated with disclosure about environmental performance (Verrecchia, 1983) and uncertainty as to whether the firm is informed regarding its type (Dye, 1985). Socio-political theories including political economy, legitimacy theory, and stakeholder theory (Patten, 2002), on the other hand, predict a negative association between environmental performance and the level of discretionary environmental disclosures. These overlapping theories suggest that social disclosure is a function of social and political pressures facing the corporation. To the extent that poor environmental performers face more political and social pressures and threatened legitimacy, they will attempt to increase discretionary environmental disclosures to change stakeholder perceptions about their actual performance. Thus, we have competing directional predictions from alternative theories, and the observed direction of association between environmental performance and the level of discretionary disclosures will eliminate one of the two predictions. The predictions of the above theories relate to discretionary, not mandatory, environmental disclosures. Previous studies assessed environmental disclosures mainly from annual reports and other regulatory filings such as 10 Ks and many of those studies rely on a Wiseman (1982) based content analysis index to measure the extent of environmental disclosures. The Wiseman index focuses on the financial consequences of corporate environmental activities and puts more weight on quantitative disclosures. Using this measure, poor environmental performers may actually have higher disclosure scores than good performers because they have greater exposures and must discuss any material financial information in their regulatory filings such as annual reports and 10 Ks. This may partially explain the inconclusive findings in the previous literature and why Patten (2002) finds a negative relation between environmental disclosure and a toxics release inventory (TRI) based environmental performance indicator.1 In collaboration with an environmental disclosure expert, we develop a content analysis index based on the global reporting initiative guidelines (GRI) to assess the level of discretionary environmental disclosures in environmental and social responsibility reports or similar disclosures provided on the firm’s web site. This index differs from Wiseman (1982) index, previously used in the literature, because we focus on firm disclosures related to its commitment to protect the environment. Our index potentially allows investors, regulators, and environmental stakeholder groups to infer environmental performance “type” from the disclosure score. This is valuable to users who seek to assess the firms’ true environmental commitment and related environmental exposures. We focus on the 2003 environmental disclosures of 191 firms drawn from five industries: Pulp and Paper, Chemicals, Oil and Gas, Metals and Mining, and Utilities. These five industries are considered to have a high pollution propensity and have collectively been the subject of a whole range of environmental regulations in the US in the past 30 or more years. The magnitude of the environmental spending by these industries to comply with the environmental regulations and the impact of their operations on the natural environment should be a major concern to investors and other environmental stakeholder groups. Thus, firms in these industries collectively form an ideal sample to test the competing predictions of voluntary disclosure and socio-political theories. In brief, our results are as follows. We find a positive association between environmental performance and the level of discretionary disclosures in environmental and social reports or related web disclosures. In other words, superior environmental performers are more forthcoming in truly discretionary disclosure channels, as predicted by the economics based voluntary disclosure theory. Our result is inconsistent with the prediction of a negative association arising from socio-political theories such as legitimacy theory and stakeholder theory. Further, using the Janis–Fadner coefficient of imbalance as a direct measure of perceived legitimacy, we fail to observe the negative association between legitimacy and the level of disclosures implied by socio-political theories.2 Thus, our results suggest that socio-political theories are not robust in predicting the level of discretionary environmental disclosures. We do, however, find that socio-political theories are helpful in predicting what is being said, which moves the focus of enquiry beyond the simple level of discretionary disclosure. Using the ratio of soft disclosure scores to total awarded scores as a proxy for “legitimization”, we show that firms with unfavorable prior year media coverage are more likely to make soft claims to be committed to the environment which are not readily verifiable. This behavior is not predicted by economic disclosure theories, which assume truth-telling. Thus, socio-political theories do indeed explain additional patterns in the data. The paper is organized as follows. Following literature review and hypothesis development, we describes our content analysis disclosure index and the measures of environmental performance which we use in the study. We then present our econometric model and preliminary empirical evidence. The sections ‘Empirical results involving the level of disclosure’ and ‘A revised role for socio-political theories’ contain the main results followed by sensitivity analysis. The final section summarizes the main findings of the study with a discussion of implications for future research.

Previous empirical evidence provides mixed results on the relationship between corporate environmental performance and the level of environmental disclosures. We revisit this relation by testing competing predictions from economics based and socio-political theories of voluntary disclosure using a more rigorous research design. In particular, we improve the prior literature in two important ways. First, the predictions of voluntary disclosure theory relate to discretionary, not mandatory, environmental disclosures. This study focuses on purely voluntary disclosure media such as corporate Internet web sites and stand-alone environmental reports. Previous studies assessed environmental disclosures mainly from annual reports and other regulatory filings such as 10 Ks and many of those studies rely on a Wiseman (1982) based content analysis index to measure the extent of environmental disclosures. Second, in collaboration with an environmental reporting expert, we develop a content analysis index to assess the level of environmental disclosure in environmental and social responsibility reports or similar disclosures in the firm’s web site. The index, which follows closely the Global Reporting Initiative (2002) sustainability reporting guidelines, differs from the Wiseman index in that we focus on firm disclosures related to its commitment to protect the environment. Our results are as follows. We find a positive association between environmental performance and the level of discretionary disclosures in environmental and social reports or related web disclosures. In other words, superior environmental performers are more forthcoming in truly discretionary disclosure channels, as predicted by economics based voluntary disclosure theories. Our findings are robust to two reliable environmental performance measures that use actual toxic emission and waste management data. The first one is based on Toxics Release Inventory scaled by sales data at firm level (i.e., TRI normalized by firm’s operational scale) and the second one is percentage of total toxic wastes that were treated or processed by each firm. In addition, our findings are not affected when we assess the relative environment performance within each industry in order to control for industry differences in pollution propensity. Our results are inconsistent with the prediction of a negative association from socio-political theories, suggesting that these theories are not robust in predicting the level of discretionary disclosure. Although there is separation in scores and good EP firms disclose more, the scores of good EP firms are low relative to the expectation implied by the 2002 GRI reporting guidelines and point to the need for improvement in the years beyond 2003. Specific areas where improvement is required include obtaining independent assurance of sustainability reports and the disclosure of environmental performance indicators. Finally, our results suggest important directions for future research. Specifically, we provide preliminary evidence that socio-political theories are robust in predicting what is being said. In particular, we find that firms whose environmental legitimacy is threatened make soft claims to be committed to the environment. This behavior is predicted by legitimacy theory but cannot be explained by economics disclosure theory. Thus, we argue that future environmental disclosure research should move the focus of enquiry beyond the level of disclosure.