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Environmental disclosure effects on returns and market value

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Abstract

This paper analyzes whether the environmental information disclosure level practiced by firms listed on the Brazilian Stock Market affects their profitability and value. The results show some disclosure by most of the sample firms, and significant differences in characteristics between firms that disclose and those that do not disclose environmental information. The paper contributes to the extant social responsibility and environmental disclosure literature by analyzing annual reports and standardized financial statements as a source of evidence, but especially for analyzing the relationship between the level of disclosure of environmental information and its lack of reflection on the profitability and value of firms. Results suggest the importance of both legitimacy theory and proprietary costs theory, each explaining part of the decision process regarding the disclosure of environmental information. Our results also demonstrate that environmental disclosure positively affects the value of publicly traded Brazilian companies.

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Notes

  1. To full understand of the index, visit: https://www.refinitiv.com/content/dam/marketing/en\_us/documents/methodology/esg-scores-methodology.pdf}.

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Authors and Affiliations

  1. Universidade do Vale do Rio dos Sinos, Av. Dr. Nilo Peçanha, 1600 - Boa Vista, Porto Alegre, RS, CEP 91330-002, Brazil

    Angela Patrícia Bovolini Pedron, Clea Beatriz Macagnan, Davi Souza Simon & Daniel Francisco Vancin

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  1. Angela Patrícia Bovolini Pedron
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  2. Clea Beatriz Macagnan
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  3. Davi Souza Simon
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  4. Daniel Francisco Vancin
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Correspondence to Angela Patrícia Bovolini Pedron.

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Pedron, A.P.B., Macagnan, C.B., Simon, D.S. et al. Environmental disclosure effects on returns and market value. Environ Dev Sustain 23, 4614–4633 (2021). https://doi.org/10.1007/s10668-020-00790-2

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