Show me? Inspire me? Make me? An institutional theory exploration of social and environmental reporting practices

Abstract

Purpose

Albeit gradual and uneven, the emergence of social and environmental reporting by publicly held corporations has been a major development in the last few decades. This paper aims to explore patterns of the emergence of these disclosures. Using an institutional theory lens, this paper considers mimetic, normative and coercive possibilities.

Design/methodology/approach

US publicly traded company data from 2013 to 2019 is used to test the hypotheses. Mimetic forces are proxied with corporate board interlock frequency. Normative ones use the extent of gender diversity on corporate boards. Measures of business climate and industry regulatory sensitivity proxy coercive potentiality.

Findings

Studied in isolation, each of the three forces through which organizations pursue the heightened legitimacy of enhanced environmental and social disclosures has credibility. The strongest support exists for mimetic and normative mechanisms, perhaps because the US government has been reluctant to make these expanded disclosures mandatory.

Research limitations/implications

In the world of voluntary action, more attention to diffusion is needed. For these purposes, better proxies will be needed to study change. Social and environmental information should be separated for individual analysis.

Practical implications

At least in the USA, companies are attentive to what other companies are doing. There is something to be said for the ethical dimension of corporate transparency.

Social implications

Governmental action in this area has not been effective, at current levels. Corporate leadership is essential. Critical information is shared about disclosure by board members.

Originality/value

Although institutional theory makes several appearances in this area, to the best of the authors’ knowledge, the current study is the first empirical archival study to examine the three forces simultaneously, providing evidence as to the relative magnitude of each institutional force on environmental and social disclosures. Should these disclosures not be mandated by government, this study shows pathways for enhanced disclosures to continue to spread.

Citation

Wukich, J.J., Neuman, E.L. and Fogarty, T.J. (2024), "Show me? Inspire me? Make me? An institutional theory exploration of social and environmental reporting practices", Journal of Accounting & Organizational Change, Vol. 20 No. 4, pp. 673-701. https://doi.org/10.1108/JAOC-01-2023-0013