The Effect of National Business Systems on Social and Environmental Disclosure: A Comparison between Brazil and Canada

Abstract

Purpose-This paper evaluates the influence of the institutional environment on the extent of social and environmental disclosure of companies from institutionally distant countries. Design/methodology/approach-We analyze basic materials, oil and gas, and public utility companies with shares traded on the Brazilian stock exchange (BM&FBovespa) and Canadian stock exchange (Toronto Stock Exchange) from 2007 to 2015. Quantitative methods are adopted through descriptive statistics and panel data analysis. The econometric modeling considers environmental and social disclosure as dependent variables, independent variables that represent the political, financial, educational and labor systems, and firm size, ROA, and indebtedness as control variables. Findings-In the case of the companies operating in Brazil, the extent of environmental and social disclosure is positively related to the political and labor systems, and negatively related to the financial system. In Canada, disclosure is negatively influenced by the financial system and the education system. The control variables, which represent characteristics of financial performance, were not significant. Originality/value-The study shows that isomorphic forces operate in the institutional field and affect the adoption of socially responsible behavior. By basing the study on institutionally distinct countries, such as Brazil and Canada, it reinforces the influence of the national business system on the extent of disclosure of environmental and social practices.

Relations between institutional environment and level of social disclosure in the banking sector: evidence from Latin America

“…The authors claim that a more transparent government can demand ethical behavior from firms. Soares et al (2020) found that the lowest level of corruption positively affects the social and environmental disclosure of companies. Thus, in countries where corruption is controlled, companies are more committed to the transparency of their social and environmental actions.…”

Disclosure of social responsibility and the competitive advantage at Sudan industrial companies

“…They found that there is a positive moderating effect of disclosure on the relationship between the Corporate Social Performance of primary stakeholders and Corporate Financial Performance. Soares et al (2020) evaluated the Effect of National Business Systems on Social and Environmental Disclosure. They concluded that environmental and social disclosure is positively correlated to the political and labor systems, and negatively related to the financial system in Brazilian companies.…”

Multi-level analysis of environmental disclosure by Brazilian and German firms

“…CSR disclosure may take different forms in different countries due to the distance between expectations and social reality (Grecco, Milani Filho, Segura, Sanchez, & Dominguez, 2013). Moreover, Abreu, Cunha, and Barlow (2015) and Soares, Sá de Abreu, Pinheiro Marino, and Rebouças (2020) believe the institutional environment also determines how firms respond to social responsibility demands. In fact, Matten and Moon (2008) see country-level differences in CSR as reflecting institutions historically rooted in national business systems (NBSs) in the long term.…”

“…Some authors (e.g., Jensen & Berg, 2012) add an economic system to the classification. Several investigators, including Matten and Moon (2008), Jensen and Berg (2012), Ioannou and Serafeim (2012), and Soares, Sá de Abreu, Pinheiro Marino, and Rebouças (2020), have found a significant association between the NBS and CSR using Whitley's framework (1999).…”

“…Several national and international authors have investigated the impact of institutional, sector-related, and organizational factors on the environment (de Mascena, Barakat, Isabella & Fischmann 2020;Kolk, 2010;Abreu, Cunha & Barlow, 2015;Soares et al 2020;Matten & Moon, 2008;Lattemann et al, 2009;Amorim, 2015;Delmas & Toffel, 2004;Viana Junior & Crisóstomo, 2019), but the present study takes one step further by comparing the institutional environments of two widely different economies (Germany and Brazil) while evaluating disclosure-related factors at multiple levels (country, sector, firm).…”