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.
Similar content being viewed by others
Notes
To full understand of the index, visit: https://www.refinitiv.com/content/dam/marketing/en\_us/documents/methodology/esg-scores-methodology.pdf}.
References
Akerlof, G. A. (1980). A theory of social custom, of which unemployment may be one consequence. Quarterly Journal of Economics, 94(4), 749–775.
Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal.
Calixto, L. (2009). Uma análise da evidenciação ambiental de companhias brasileiras–de 1997 a 2005. Revista Contabilidade, Gestão e Governança, 10(1).
Cezar, J. F., & Silva, J. A. (2008). A relação entre a responsabilidade social e ambiental com o desemprego financeiro: Um estudo empírico na Bovespa no periodo de 1999 a 2006. paper presented at the III Congresso ANPCONT, 2008, Salvador, available at http://www.fucape.br/_public/producao_cientifica/2/ANPCONT%20-%20Annor.pdf. Accessed 10 Sept 2018.
Chung, K. H., & Pruitt, S. W. (1994). A simple approximation of Tobin’s q. Financial Management, 23(3), 70–74.
Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, organizations and society, 33(4–5), 303–327.
Cormier, D., Gordon, I. M., & Magnan, M. (2004). Corporate environmental disclosure: Contrasting management’s perceptions with reality. Journal of Business Ethics, 49(2), 143–165.
Cormier, D., Magnan, M., & Van Velthoven, B. (2005). Environmental disclosure quality in large German companies: Economic incentives, public pressures or institutional conditions? European Accounting Review, 14(1), 3–39.
Darrough, M. N., & Stoughton, N. M. (1990). Financial disclosure policy in an entry game. Journal of Accounting and Economics, 12(1–3), 219–243.
de Sousa Campos, L. M., Grzebieluckas, C., & Selig, P. M. (2009). As Empresas Com Certificação Iso 14001 São Mais Rentáveis? Uma Abordagem Em Companhias Abertas No Brasil. REAd, 15(1).
Deegan, C., & Gordon, B. (1996). A study of the environmental disclosure practices of Australian corporations. Accounting and business research, 26(3), 187–199.
Deegan, C., Rankin, M., & Tobin, J. (2002). An examination of the corporate social and environmental disclosures of BHP from 1983–1997: A test of legitimacy theory. Accounting, Auditing & Accountability Journal, 15, 312–343.
Deswanto, R. B. & Siregar, S. V. (2018). The associations between environmental disclosures with financial performance, environmental performance, and firm value. Social Responsibility Journal.
Dowell, G., Hart, S., Yeung, B. (2000). Do corporate global environmental standards create or destroy market value? Management Science, 46 No. February, pp. 1059–1074.
Dye, R. A. (1986). Proprietary and nonproprietary disclosures. The Journal of Business, 59(2), 331–366.
Dye, R. A. (2001). An evaluation of essays on disclosure and the disclosure literature in accounting. Journal of Accounting and Economics, 32(1–3), 181–235.
Elijido-ten, E. (2009). Can stakeholder theory add to our understanding of Malaysian environmental reporting attitudes? Management and Accounting Review (MAR), 8(2), 85–110.
Elliott, R. K., & Jacobson, P. D. (1994). Costs and benefits of business information disclosure. Accounting Horizons, 8(4), 80–96.
Fazzini, M., & Dal Maso, L. (2016). The value relevance of “assured” environmental disclosure. Sustainability Accounting, Management and Policy Journal, 7(2), 225–245. https://doi.org/10.1108/SAMPJ-10-2014-0060.
Fekrat, M. A., Inclan, C., & Petroni, D. (1996). Corporate environmental disclosures: Competitive disclosure hypothesis using 1991 annual report data. The International Journal of Accounting, 31(2), 175–195.
Fishman, M. J., & Hagerty, K. M. (1989). Disclosure decisions by firms and the competition for price efficiency. The Journal of Finance, 44(3), 633–647.
Forti, C. A. B., & Peixoto, F. M. (2015). Determinant factors of dividend payments in Brazil. Revista Contabilidade & Finanças, 26(68), 167–180. https://doi.org/10.1590/1808-057x201512260.
Hackston, D., & Milne, M. (1996). Some determinants of social and environmental disclosures in New Zealand companies. Accounting, Auditing & Accountability Journal, 9, 77–108.
Huian, M. C., & Mironiuc, M. (2019). A comprehensive analysis of the Nexus between environmental reporting and market performance of European companies. Environmental Engineering & Management Journal (EEMJ) 18.1.
Islam, M. A., & Deegan, C. (2010). Media pressures and corporate disclosure of social responsibility performance information: A study of two global clothing and sports retail companies. Accounting and Business Research, 40(2), 131–148.
Jensen, M. C., & Meckling, W. H. (1979). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Economics Social Institutions. Springer, Dordrecht, pp. 163–231.
Kammler, E. L., & Alves, T. W. (2009). Analysis of the explanatory capacity of investment using Tobin’s ‘q’ in Brazilian Publicly quoted companies. RAE-Eletrônica, Vol. 8 No. 2.
King, A., & Lenox, M. (2002). Exploring the locus of profitable pollution reduction. Management Science, 48(2), 289–299.
Kosztrzepa, R. D. O. (2004). Evidenciação Dos Eventos Relacionados Com o Meio Ambiente: Um Estudo Em Indústrias Químicas, Master’s dissertation, Universidade do Vale do Rio dos Sinos.
Krausmann, F., Gingrich, S., Eisenmenger, N., Erb, K. H., Haberl, H., Fischer-Kowalski, M. (2009). Growth in global materials use, GDP and population during the 20th century. Ecological Economics, Elsevier B.V., Vol. 68 No. 10, pp. 2696–2705.
Laine, M. (2009). Ensuring legitimacy through rhetorical changes?: A longitudinal interpretation of the environmental disclosures of a leading Finnish chemical company. Accounting, Auditing & Accountability Journal, 22(7), 1029–1054.
Lev, B. (1992). Information disclosure strategy. California Management Review, 34(4), 9–32.
Lindstaedt, A. R. S. (2007). Um Estudo Exploratório Sobre o Nível de Aderência de Empresas, Com Atuação No Brasil, Às Normas e Recomendações de Organismos Nacionais e Internacionais Relativas à Divulgação de Informações de Natureza Ambiental, Master’s dissertation, Universidade do Vale do Rio dos Sinos.
Macagnan, C. B. (2007). Condicionantes e Implicación de Revelar Activos Intangibles, Ph.D. thesis, Universitat Autonoma de Barcelona.
Martín, F. D., González, A. B., & Román, C. P. (2010). Medición de la legitimidad organizativa: El caso de las Sociedades de Garantía Recíproca. Cuadernos de Economía y Dirección de La Empresa, 13(43), 115–143.
Mussoi, A., & Van Bellen, H. M. (2010). Evidenciação ambiental: Uma comparação do nível de evidenciação entre os relatórios de empresas brasileiras. Revista de Contabilidade e Organizações, 4(9), 55–78.
Nossa, V. (2002). Disclosure Ambiental: Uma Análise Do Conteúdo Dos Relatórios Ambientais de Empresas Do Setor de Papel e Celulose Em Nível Internacional, Ph.D. thesis, Universidade de São Paulo.
Odriozola, M. D., & Baraibar-Diez, E. (2017). Is corporate reputation associated with quality of CSR reporting? Evidence from Spain. Corporate Social Responsibility and Environmental Management, 24(2), 121–132.
Ortas, E., Gallego-Alvarez, I., & Alvarez Etxeberria, I. (2015). Financial factors influencing the quality of corporate social responsibility and environmental management disclosure: A quantile regression approach. Corporate Social Responsibility and Environmental Management, 22(6), 362–380.
Patten, D. M. (1991). Exposure, legitimacy, and social disclosure. Journal of Accounting and Public Policy, 10(4), 297–308.
Patten, D. M. (1992). Intra-industry environmental disclosures in response to the Alaskan oil spill: A note on legitimacy theory. Accounting, Organizations and Society, 17(5), 471–475.
Pereira, G., Carvalho, F. N. De, & Parente, E. G. V. (2011). Economic performance and environmental disclosure: An analysis of companies that received the award “rumo à credibilidade 2010. Revista Catarinense Da Ciência Contábil, 10(30), 9–26.
Prencipe, A. (2004). Proprietary costs and determinants of voluntary segment disclosure: Evidence from Italian listed companies. European Accounting Review, 13(2), 319–340.
Qiu, Yan, Shaukat, Amama, & Tharyan, Rajesh. (2016). Environmental and social disclosures: Link with corporate financial performance. The British Accounting Review, 48(1), 102–116.
Radhouane, I. et al. (2019). Is voluntary external assurance relevant for the valuation of environmental reporting by firms in environmentally sensitive industries?. Sustainability Accounting, Management and Policy Journal.
Roque, V., & Cortez, C. (2006). A divulgação de informação ambiental e a performance financeira das empresas cotadas em Portugal. Revista de Estudos Politécnicos, III(1645–9911), 119–143.
Sampaio, M. S., da Silva Gomes, S. M., Bruni, A. L., Dias Filho, J. M. (2012). Evidenciação De Informações Socioambientais E Isomorfismo: Um Estudo Com Mineradoras Brasileiras. Revista Universo Contábil, pp. 105–122.
Seibert, R. M. (2017), Determinantes Da Evidenciação de Informações Representativas de Responsabilidade Social: Um Estudo Em Instituições de Ensino Superior Filantrópicas, Ph.D. thesis, Universidade do Vale do Rio dos Sinos.
Shocker, A. D., & Sethi, S. P. (1973). An approach to incorporating societal preferences in developing corporate action strategies. California Management Review, 15(4), 97–105.
Stanwick, S. D., & Stanwick, P. A. (2000). The relationship between environmental disclosures and financial performance: An empirical study of US firms. Eco-Management & Auditing, 7(4), 155–164.
Tinoco, J. E. P., & Robles, L. T. (2006). A contabilidade da gestão ambiental e sua dimensão para a transparência empresarial: estudo de caso de quatro empresas brasileiras com atuação global. Revista de Administração Pública, 40(6), 1077–1096.
Verrecchia, R. E. (1983). Discretionary disclosure. Journal of Accounting and Economics, 5, 179–194.
Verrecchia, R. E. (2001). Essays on disclosure. Journal of Accounting and Economics, 32(1–3), 97–180.
von Alberti-Alhtaybat, L., Hutaibat, K., & Al-Htaybat, K. (2012). Mapping corporate disclosure theories. Journal of Financial Reporting and Accounting, 10(1), 73–94.
Wagenhofer, A. (1990). Voluntary disclosure with a strategic opponent. Journal of Accounting and Economics, 12(4), 341–363.
Williamson, O. E. (1979). Transaction-cost economics: The governance of contractual relations. The Journal of Law and Economics, 22(2), 233.
Wilmshurst, T. D., & Frost, G. R. (2000). Corporate environmental reporting. Accounting, Auditing & Accountability Journal, 13(1), 10–26.
Wiseman, J. (1982) An evaluation of environmental disclosures made in corporate annual reports. Accounting, Organizations and Society, 7(1), 53–63.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
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
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10668-020-00790-2