Do Australian companies report environmental news objectively?

Abstract

favourable to themselves. That is, they may elect to use environmental disclosures in a self-laudatory manner.Consistent with a view that companies may use annual reports to emphasize positive environmental attributes, previous Australian research studies (for example, Deegan and Gordon, 1996;Guthrie and Parker, 1990) have shown that many firms present environmental information, but they only tend to present information which is favourable to their corporate image. Within this prior research, the firms selected for review typically were selected on a random basis, meaning that there would be a possibility (albeit, remote) that such firms only had positive environmental news to report. This study takes the analysis a step further. It investigates the environmental reporting practices of a sample of 20 Australian companies which were subject to successful prosecution by the New South Wales, and Victorian Environmental Protection Authorities (EPA), during the period 1990-1993[3]. That is, we are investigating the environmental reporting practices of firms which are known, ex ante, to have bad news available to report. We investigate whether these firms disclose information about their environmental misdemeanours, or whether, consistent with the random sample reviewed by Deegan and Gordon (1996), the firms use their environmental disclosures in a very self-laudatory manner. We also investigate whether there appear to be any systematic variations in environmental reporting practices around the time of the proven EPA prosecutions. Prior Australian research relating to corporate environmental disclosuresEnvironmental disclosures constitute part of what frequently are labelled social responsibility disclosures. Social responsibility disclosures can include, among other things, disclosures relating to the interaction between an organization and its physical and social environment inclusive of disclosures relating to human resources, community involvement, the natural environment, energy, and product safety. Trotman (1979) represents one of the earliest studies on Australian social responsibility disclosures. Reviewing the corporate social disclosures of the largest 100 Australian companies between 1967 and 1977, Trotman found the disclosures to increase across time. He explained the increase in disclosures as a strategy to improve public image and gain public acceptance. He also viewed the practice of disclosing social information as a means of minimizing the likelihood of strikes, product boycotts and the introduction of legislation detrimental to the organization. Trotman and Bradley (1981) undertook a review of social responsibility disclosures made by 207 companies in the 1978 financial year. Specifically, they sought to relate the quantity of disclosure to a number of factors that had been synthesized from a review of the existing literature on social responsibility disclosures. These factors were size, systematic risk, social constraints and the management decision horizon. The synthesization process adopted by the...

The levels of disclosure relating to mine closure obligations by platinum mining companies

“…obligations include the provisions for decommissioning and rehabilitation. The estimation uncertainty of mine closure obligations creates an opportunity where management can plausibly withhold 'bad news' (Deegan & Rankin 1996;Ferguson & Walker 2011). This situation allows management to either withhold disclosure of 'bad news' to protect their proprietary information for economic advantage (Dye 1985) or presents an opportunity to reduce the price impact on the per share value of a company by either disclosing or withholding information (Verrecchia 1983).…”

Factors Associated with the Social and Environmental Reporting of Australian Companies

“…Few papers (Parker, 2005;Deegan & Soltys 2007;Owen, 2008) have sought to review previous SER literature in its historical context. A brief description of studies related to the extent of SER and their determinants within a developed economy are as follows: Guthrie & Parker 1990;Gray et al 1995a;Deegan & Gordan 1996;Deegan & Rankin 1996;Gamble et al 1996;Gray et al 1996;Schaltegger & Burritt 2000;Baker 2001;Adams 2002;Burritt 2002;Deegan 2002;Solomon & Lewis 2002;Holland & Foo 2003;Tinker & Gray 2003;Vanstraelen et al 2003;Adams & Zutshi 2004;Gray 2006 Studies which examined the determinants of SER Hackston & Milne 1996;Adams et al 1998;Ho & Taylor 2007 Although literature has highlighted the need for standardisation of SER practice using GRI guidelines, no published work has sought to examine the extent of SER based on these widely accepted GRI (2002) social and environmental reporting guidelines in Australia and India. As a result, both domestic and overseas investors are not fully aware of the extent and quality of SER within listed companies in these two countries.…”

“…There has been an increase in reporting on social and environmental issues by major corporations (Gray 2006). The volume of environmental legislation in Australia has increased but the requirement to disclose environmental information within annual reports, however, has not kept pace with the legislative reform (Deegan & Rankin 1996). The amount of voluntary environmental disclosures in Australia is typically low and the disclosures are typically self-laudatory, with little or no negative disclosure (Deegan & Gordon 1996).…”

Sustainable Development Reporting: Evidence from Thailand

“…Jose and Lee (2007) and Kolk et al (2001) noted the variations in SD reporting across countries. Meanwhile, Ho and Taylor (2007) and Deegan and Rankin (1996) examined types of SD disclosures and content in the annual reports. In addition, the influences of specific pressure groups (Deegan & Gordon, 1996) and media attention (Brown et al, 2009) on the content of SD disclosures were investigated.…”