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Article
Publication date: 24 January 2023

Kwadjo Appiagyei and Augustine Donkor

This study examines the effect of the environmental sensitivity of firms on the relationship between integrated reporting (IR) quality and sustainability performance. Prior…

Abstract

Purpose

This study examines the effect of the environmental sensitivity of firms on the relationship between integrated reporting (IR) quality and sustainability performance. Prior research works focus on the nexus between IR quality and sustainability performance with little attention to factors that moderate this relationship.

Design/methodology/approach

Ordinary least squares (OLS) and other robust estimations are employed to analyse the data of firms on the Johannesburg Stock Exchange (JSE).

Findings

This study finds a positive association between IR quality and sustainability performance. However, the strength of this relationship is found to be weaker among environmentally sensitive firms, thereby raising concerns that such firms may be reporting less sustainability information with the mandatory implementation of IR on the JSE.

Practical implications

The findings highlight the need for regulatory bodies to consider additional sustainability disclosure requirements for firms in environmentally sensitive industries.

Social implications

The findings should make regulatory bodies aware of the possible actions of environmentally sensitive firms in relation to sustainability information within a mandatory setting of IR.

Originality/value

The study extends the existing literature on IR and sustainability performance by considering the effect of firm environmental sensitivity as a moderating factor.

Details

Journal of Accounting in Emerging Economies, vol. 14 no. 1
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 21 February 2022

Camélia Radu, Nadia Smaili and Adela Constantinescu

This study investigates the relation between the board of directors' attributes and corporate social performance. The authors examine three board of directors: characteristics…

Abstract

Purpose

This study investigates the relation between the board of directors' attributes and corporate social performance. The authors examine three board of directors: characteristics, size, independence and gender diversity, and how they interact with industry to affect corporate social performance.

Design/methodology/approach

The authors use a multivariate approach to analyze and compare the effects of governance variables on two aspects of corporate social performance, its environmental and social dimensions.

Findings

Based on a sample of 983 firm-year observations, our main findings indicate that board independence, size and gender diversity each has a different impact on the environmental and social dimensions of performance, but that industrial sector moderates these effects. In particular, our results show that board member independence is positively associated with the environmental dimension of the performance of all the sample industries, but only has a positive association with the social dimension when the firms are in industries other than those that are environmentally sensitive. For these latter industries, board independence is negatively associated with the social dimension. Board size is positively associated with the environmental dimension for environmentally sensitive industries only and with the social dimension for all the industries examined, with a stronger positive effect on the latter in regard to environmentally sensitive industries.

Research limitations/implications

Women directors appear to raise social and environmental concerns within the board, as evidenced by their positive effect on the firms' social and environmental performance, with a stronger impact on the former.

Practical implications

Regulators can promote changes to the way Canadian companies select directors for the purpose of achieving sustainable performance while investors will be better informed about the impact of some of the board attributes on the environmental and social dimension of performance.

Originality/value

This study provides a portrait of the impact of governance attributes on the environmental and social dimension of performance of Canadian companies. Given the increasing interest in gender diversity in recent years, this study provides new evidence on the benefits of female board members for the two non-financial dimensions of performance.

Details

Journal of Applied Accounting Research, vol. 23 no. 5
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 2 August 2013

Lopin Kuo and Vivian Yi-Ju Chen

The purpose of this paper is to investigate the relationship between level of environmental disclosure and establishment of a legitimacy image of operation among Japanese firms…

3574

Abstract

Purpose

The purpose of this paper is to investigate the relationship between level of environmental disclosure and establishment of a legitimacy image of operation among Japanese firms after implementation of the Kyoto Protocol.

Design/methodology/approach

This study uses a sample consisting of 208 firms listed in the Japan Nikkei Stock Index 500 and adopts three-stage least-squares (3SLS) to explore the relationship between environmental news exposure, environmental disclosure in corporate social responsibility (CSR) reports, and environmental legitimacy.

Findings

Results indicate that firms from environmentally-sensitive industries can significantly improve their perceived legitimacy by releasing CSR reports; firms with better prior environmental legitimacy will be more active in environmental disclosure and establish better environmental legitimacy in the next period; firms with better carbon reduction performance tend to have higher levels of environmental disclosure. In terms of carbon reduction performance, Japanese firms in the sample may reduce carbon dioxide emissions by 49.636 tons by allocating one million yens (approximately 9,670.3 euros or 12,328 US dollars) to environmental expenditure.

Practical implications

The top three items of environmental disclosure in most Japanese firms ' CSR reports are environmental management, development of alternative energies, and ecological information. These results reveal environmental behavior of sample firms in Japan to mitigate global warming. The managers should understand that the impact of substantive actions for environmental management on legitimacy is greater.

Originality/value

Environmental management has become an important component of business management beliefs for most firms, and Japanese firms that belong to environmentally-sensitive industries are even more active in using CSR reports as an effective tool to establish their legitimacy image.

Article
Publication date: 28 May 2020

Astrid Rudyanto and Kashan Pirzada

The purpose of this study is to examine the moderating effect of sustainability reporting on the relationship between tax avoidance and firm value. This study also examines the…

2734

Abstract

Purpose

The purpose of this study is to examine the moderating effect of sustainability reporting on the relationship between tax avoidance and firm value. This study also examines the moderating effect of sustainability reporting in both environmentally sensitive firms and non-environmentally sensitive firms.

Design/methodology/approach

This research uses moderated panel regression with 596 observations and 734 observations for cash effective tax rate (ETR) and generally accepted accounting principles effective tax rate (GAAP ETR) of firms listed on the Indonesian Stock Exchange between 2014 and 2016. Tax avoidance is measured by both cash ETR and GAAP ETR.

Findings

This paper shows that sustainability reporting moderates the relationship between tax avoidance (GAAP ETR) and firm value. The results show that GAAP ETR has a negative association with firm value in non-environmentally sensitive firms and a positive association with firm value in environmentally sensitive firms. Consequently, the sustainability report alters only the effect of GAAP ETR on firm value in non-environmentally sensitive firms. The results imply that, unlike environmentally sensitive firms, non-environmentally sensitive firms need sustainability reporting to reduce the reputational costs of tax avoidance.

Originality/value

How shareholders view tax avoidance remains unclear; research on this topic often fails to produce a uniform result. The present research fills this gap by using the existence of sustainability reporting as proof of companies’ ethical motivations to moderate the association of tax avoidance and firm value, which has not been discussed in previous research.

Details

Social Responsibility Journal, vol. 17 no. 5
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 26 April 2022

P.S. Raghu Kumari, Harnesh Makhija, Dipasha Sharma and Abhishek Behl

The study aims to identify the impact of board characteristics (BC) on a firm's environmental performance, and provides future research directions in the area of BC impact on…

1043

Abstract

Purpose

The study aims to identify the impact of board characteristics (BC) on a firm's environmental performance, and provides future research directions in the area of BC impact on environmental disclosures (ED) in case of India's environmentally sensitive and non-sensitive industries (SI and NSI).

Design/methodology/approach

The authors collect firm-level data from Prowess and Bloomberg, which cover 1,158 firm-year observations from National Stock Exchange of India (NSE) 500 listed companies from 2015 to 2020, and use a dynamic panel regression analysis to get deeper insights on the relationship of ED and BC.

Findings

The study found that lagged environment disclosure score is positively and significantly associated with current environmental disclosure scores. The presence of sustainability committee, board size and frequency of meetings has a positive and significant association with ED for sensitive as well as non-sensitive industry groups. Factors such as board Independence, board gender diversity and CEO duality have no significant impact on ED of both sensitive and non-sensitive industry groups.

Originality/value

Based on agency theory and stakeholder theory authors study for the first time in the context of India the effect of BC on ED using a large sample and covering an extensive period of six years. This study contributes by offering deep insights about the impact in case of “environmentally sensitive, non-sensitive and also all industries case”. The findings of this study are valuable for corporate managers and regulators who are interested in improving ED practices through a better-governed corporate mechanism.

Details

International Journal of Managerial Finance, vol. 18 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 7 April 2015

Marna De Klerk, Charl de Villiers and Chris van Staden

The purpose of this paper is to examine the association between share prices and the level of corporate social responsibility (CSR) disclosure of large UK companies, using CSR…

5758

Abstract

Purpose

The purpose of this paper is to examine the association between share prices and the level of corporate social responsibility (CSR) disclosure of large UK companies, using CSR data from an independent firm and a time period and setting (the UK) that coincides with increased legislation and increased public awareness of corporate social and environmental issues. Against a background of increased interest by investors in CSR disclosure, prior mixed results on the association between CSR disclosure and share prices suggest the need for further research that overcome some of the identified limitations of the extant literature.

Design/methodology/approach

A modified Ohlson (1995) model is used to examine the relationship between CSR disclosure and share prices among the 100 largest UK companies. Three different measures of CSR disclosure are used to ensure robustness of results.

Findings

The paper finds that higher levels of CSR disclosure are associated with higher share prices. Furthermore, the paper provides evidence that CSR disclosure by companies operating in environmentally sensitive industries show a stronger association with share prices than CSR disclosure by companies operating in other industries. The paper concludes that CSR disclosure provides incremental value-relevant information to investors beyond financial accounting information.

Originality/value

To the best of our knowledge, this is the first paper to provide evidence of the incremental value of CSR disclosure to share price determination in the UK, a country where CSR disclosure is high on the agenda. Our findings provide evidence that CSR disclosures by companies and, in particular, disclosures following the global reporting initiative(GRI) guidelines, are useful to investors and shareholders, as it is related to share price information.

Article
Publication date: 29 June 2012

Marna de Klerk and Charl de Villiers

Corporate responsibility reporting (CRR) deals with companies’ ethical, economic, environmental, and social impacts. The purpose of this paper is to contribute to the debate on…

2188

Abstract

Purpose

Corporate responsibility reporting (CRR) deals with companies’ ethical, economic, environmental, and social impacts. The purpose of this paper is to contribute to the debate on whether CRR is associated with the information set that shareholders use to value a company's equity and therefore, the value‐relevance thereof for investment decision making.

Design/methodology/approach

The paper uses a modified Ohlson model developed by Hassel, Nilsson and Nyquist to examine the role of CRR in providing information to shareholders that may affect their valuation of a company. The paper uses two data sets, namely a KPMG dataset on the CRR of the top 100 South African companies and the McGregor BFA database for financial data.

Findings

It was found that the share prices of companies with higher levels of CRR are likely to be higher.

Originality/value

Prior research in which different valuation methods and different assessment periods were used was conducted in different developed countries. Some studies show value relevance, while others do not. South Africa is a developing country and by bringing a developing country to the literature the authors’ aim is to contribute to the current debate on the value relevance of CRR.

Article
Publication date: 8 April 2014

Christina He and Janice Loftus

The purpose of this study is to evaluate the environmental disclosure practices of firms engaged in environmentally sensitive industries by examining their association with…

1831

Abstract

Purpose

The purpose of this study is to evaluate the environmental disclosure practices of firms engaged in environmentally sensitive industries by examining their association with environmental performance.

Design/methodology/approach

The study tests for associations between environmental performance and the level and nature of environmental disclosures by listed Chinese firms operating in industries that have been identified by a regulator as environmentally sensitive. The level of environmental disclosure is measured using a disclosure index based on the global reporting initiative. The nature of environmental disclosure is measured as the ratio of hard to total disclosure items.

Findings

Firms with more favourable environmental performance provide a higher level of environmental disclosure and include a greater proportion of hard disclosure items. However, the overall level of disclosure is lower than that observed in developed countries.

Research limitations/implications

Due to data constraints, the proxy for environmental performance is based on the receipt and maintenance of environmental titles and awards and does not capture variation in the level of environmental performance of firms with no titles or awards.

Practical implications

As China continues to embrace market-based economic reform, the ability to reflect sustainable choices through market transactions is of increasing importance to the preservation of economic, natural and social capital for future generations.

Originality/value

The study examines the relation between environmental reporting and environmental performance by firms operating in industries that have been identified by a regulator as environmentally sensitive.

Details

Pacific Accounting Review, vol. 26 no. 1/2
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 18 August 2022

Md Mustafizur Rahaman, Md Moazzem Hossain and Md. Borhan Uddin Bhuiyan

The new audit regulation for disclosure of key audit matters (KAMs) in financial reporting has been introduced in both developed and developing countries. This study investigates…

1256

Abstract

Purpose

The new audit regulation for disclosure of key audit matters (KAMs) in financial reporting has been introduced in both developed and developing countries. This study investigates the influence of three distinctive sets of variables, namely industry features, firm characteristics and auditor attributes, on the extent, pattern and level of disclosure of KAMs by companies listed in Bangladesh, an emerging economy.

Design/methodology/approach

The study uses qualitative and quantitative research approaches to investigate the pattern of disclosure of KAMs and their determinants. With a sample of 447 firm-year observations from companies listed on the Dhaka Stock Exchange over 2018–2020, the study reveals industry-level, firm-level and auditor-specific characteristics that affect KAMs' communication in the new audit reporting model.

Findings

The findings suggest that significant differences exist between firms in the number and types of KAMs reported and the extent of their disclosure. The study findings also observed variations both within and across different industry sectors. Highly regulated firms disclose a greater number of KAMs, while environmentally sensitive firms are found to provide a greater detail of the issues presented as KAMs. Further, both firm size and age positively impact the number of KAMs disclosed and the extent of the disclosure provided. Big-4-affiliated auditors do not issue a significantly higher number of KAMs but deliver extensive details to their KAMs description, compared to non-Big-4 auditors. In addition, while auditors, in general, tend to issue boilerplate KAMs, Big-4 associates are found to disclose more new KAMs. However, audit fees and auditor rotation do not influence KAMs disclosure.

Research limitations/implications

This study is based on two years of publicly available data. However, future studies could consider in-depth interviews to explore the motivation behind KAMs' disclosure in Bangladesh and other developing countries with similar cultural and contextual values.

Practical implications

These findings have substantial policy considerations for improving firms' audit quality and, thus, their financial reporting quality, with implications for national and international standard-setters, regulators and other stakeholders.

Originality/value

This study is one of the earliest endeavours to investigate KAMs in a context of an emerging country, such as Bangladesh, which adopted KAMs' disclosure in 2018.

Details

Journal of Accounting in Emerging Economies, vol. 13 no. 3
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 31 July 2009

Charles H. Cho, Jillian R. Phillips, Amy M. Hageman and Dennis M. Patten

The purpose of this paper is to determine whether the presentation medium of corporate social and environmental web site disclosure has an impact on user trust in such disclosure…

6655

Abstract

Purpose

The purpose of this paper is to determine whether the presentation medium of corporate social and environmental web site disclosure has an impact on user trust in such disclosure, and to examine the effect of media richness on user perception about corporate social and environmental responsibility.

Design/methodology/approach

The paper's methodology is a three‐by‐two between‐subjects design experiment, manipulating presentation medium and industry type. Participants viewed social and environmental web site disclosures and completed and communicated their perceptions of trust and the experimental companies' corporate social responsibility.

Findings

The presentation medium richness of social and environmental web site disclosures is positively associated with: trusting intentions, but not trusting beliefs, of web site users; and user perception of corporate social and environmental responsibility.

Research limitations/implications

As with all controlled experiments, the research design focused on internal validity to maintain control over the task design, manipulation, and measurement of variables. While this required trade‐offs with external validity, the task was designed based on real‐world scenarios to maintain high levels of external validity within the experimental setting.

Practical implications

The paper provides evidence that corporations could use enhanced web‐based technology to potentially mislead users regarding their performance in the social domain.

Originality/value

The paper extends the visual disclosure literature by examining the richness of the image/visual media, and investigates whether user perceptions are impacted by the variations in its richness.

Details

Accounting, Auditing & Accountability Journal, vol. 22 no. 6
Type: Research Article
ISSN: 0951-3574

Keywords

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