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Environmental disclosure quality and risk: the moderating effect of corporate governance

Zabihollah Rezaee (School of Accountancy, The University of Memphis, Memphis, Tennessee, USA)
Mohammad Alipour (Department of Accounting and Management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran)
Omid Faraji (Faculty of Management and Accounting, College of Farabi, University of Tehran, Tehran, Iran)
Mehrdad Ghanbari (Department of Accounting, Kermanshah branch, Islamic Azad University, Kermanshah, Iran)
Babak Jamshidinavid (Department of Accounting, Kermanshah branch, Islamic Azad University, Kermanshah, Iran)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 10 June 2020

Issue publication date: 3 August 2021




The purpose of this article is to investigate the relationship between environmental disclosure quality (EDQ) and risk and to further examine whether corporate governance (CG) practices moderate this relationship.


This study uses a set of unique, hand collected data (from 2011 to 2016) to measure EDQ for a sample of 762 firm-years Iranian listed companies. Ordinary least squares regression analysis is performed in testing hypotheses after controlling for a variety of firm, industry and year effects. Moreover, several analyses are performed to establish the robustness of the findings.


The results indicate a negative association between EDQ and firm risk. While board independence moderates this relationship, other CG practices such as CEO duality and board size do not show any effects on the relationship between EDQ and risk. The results remain robust after performing sensitivity tests and under various specifications, including the fixed-effects panel data and Heckman two-stage regressions.

Research limitations/implications

Results are from a sample of firms from one country.

Practical implications

The results have implications for policymakers, legislators and corporate executives, as environmental initiatives are gaining more attention worldwide.

Social implications

Sustainability initiatives in the areas of environmental and social performance and disclosure are gaining global attention. This study addresses the link between firm risk and EDQ.


This study contributes to the literature by shedding light on the relationship between corporate risk-taking and EDQ in the context of a developing economy.



This paper forms part of a special section “Sustainability Accounting, Management and Policy in Emerging & Developing Economies”, guest edited by Diogenis Baboukardos, Eshani Beddewela and Teerooven Soobaroyen.

The authors gratefully acknowledge Editor in Chief Professor Carol Adams, Guest Editor Professors Diogenis Baboukardos and Teerooven Soobaroyen, and two anonymous reviewers for their generous feedback and constructive comments. The authors also thank Professor Abbas Aflatooni, Fakhroddin Mohammadrezaei, and Mostafa Dorri for their help on an earlier version of this work.


Rezaee, Z., Alipour, M., Faraji, O., Ghanbari, M. and Jamshidinavid, B. (2021), "Environmental disclosure quality and risk: the moderating effect of corporate governance", Sustainability Accounting, Management and Policy Journal, Vol. 12 No. 4, pp. 733-766.



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