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Do environmental responsibility views influence investors’ use of environmental performance and assurance information?

William Dilla (Department of Accounting, Iowa State University, Ames, Iowa, USA)
Diane Janvrin (Department of Accounting, Iowa State University, Ames, Iowa, USA)
Jon Perkins (Department of Accounting, Iowa State University, Ames, Iowa, USA)
Robyn Raschke (Department of Accounting, University of Nevada at Las Vegas, Las Vegas, Nevada, USA and University of Nevada, Las Vegas, Nevada, USA)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 19 June 2019

Issue publication date: 9 July 2019

Abstract

Purpose

The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return).

Design/methodology/approach

Nonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study.

Findings

Environmental performance and assurance information had a greater influence on the investment judgments of investors with strong environmental responsibility views. In contrast, participants’ environmental performance return views did not moderate the influence of environmental performance and assurance information on their judgments. Supplemental analysis indicates that these contrasting results are due to the fact that the two investor views have differing influences on the relative importance that investors place on financial vs environmental performance information.

Research limitations/implications

This study presented participants with summarized financial and environmental performance information to maintain scale compatibility between financial and environmental measures. However, the information was presented in a format similar to those used by online brokerages.

Practical implications

This study suggests that financial statement preparers should consider investors’ views regarding the importance and value of environmental performance information when making decisions to disclose and obtain assurance on this information.

Social implications

Standard setters should consider individual differences among investors when developing guidance regarding the disclosure and assurance of environmental performance information.

Originality/value

There is limited prior research which examines how investors’ views of the importance of environmental performance information may influence investment judgments. This research indicates that the strength of investors’ environmental responsibility importance moderates the previously reported influence of environmental performance and assurance information on investment judgments.

Keywords

Citation

Dilla, W., Janvrin, D., Perkins, J. and Raschke, R. (2019), "Do environmental responsibility views influence investors’ use of environmental performance and assurance information?", Sustainability Accounting, Management and Policy Journal, Vol. 10 No. 3, pp. 476-497. https://doi.org/10.1108/SAMPJ-12-2018-0357

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited