Does ownership type affect environmental disclosure?

Abstract

Purpose In recent years, firms tend to direct their attention in communicating their environmental actions with their stakeholders. However, the level of environmental disclosers varies significantly among firms. This paper aims to explain the variation in environmental disclosure of firms based on their ownership type, namely – state ownership and institutional ownership. The study further aims to understand whether and how the relationship between ownership structure and environmental disclosure changes regarding countries’ development levels. Design/methodology/approach This paper uses a sample of 27,847 firm-year observations from 72 countries/economic districts between the years 2002 and 2017 and regression analysis to test how the relationship between different ownership structures and environmental disclosure and whether this relation is conditional on countries’ development levels. Findings This study finds that firms with higher state ownership have higher environmental disclosures and higher institutional ownership has a negative effect on environmental disclosures. Furthermore, this paper also documents that firms with higher state ownership and operating in developed countries have incrementally higher environmental disclosure, relative to firms operating in developing countries. Research limitations/implications The study has limitations that would provide possible starting points for further research. The first limitation is related to the environmental disclosure measure, which reflects the level of environmental disclosure of firms based on their disclosure information given in the Thomson Reuters, Asset4 database. A more refined measure can be constructed using hand-collected data based on linguistic analysis, which may reflect not only the level of the disclosure but also the quality of the environmental disclosure. The second limitation is the limited focus of the study toward state and institutional shareholding. Therefore, future research may consider examining the different types of ownership such as family ownership. Practical implications The findings of the study may help policymakers and regulators to consider the potential impact of various ownership types on environmental disclosures. Also, given the impact of countries’ development levels, regulators should consider that a one-size-fits-all is not applicable in environmental disclosures. Therefore, each country should consider the institutional dynamics of their operating environment to set appropriate regulations to enhance environmental disclosures. Social implications From a social perspective, the findings indicate that firms’ stakeholder engagement via environmental disclosures depends on the type of the controlling shareholders. Originality/value This study contributes to the literature by developing a new construct for environmental disclosure based on Biodiversity, Climate Change, Environmental Investments and Spill Impact Reduction performance measures. Further, grounding on legitimacy and stakeholder theories, this study shows the influence of ownership type on environmental disclosures and how this effect changes in accordance with the countries’ development.

Corporate Governance and Environmental Sustainability Disclosure in Non-financial Companies Quoted in Nigeria

“…In a similar fashion, Kilincarslan, Elmagrhi, and Li [47] conducted a study to ascertain the influence of corporate governance on environmental sustainability reporting and concluded that proxies of corporate governance are positive and have significant influence on companies' environmental sustainability reporting practices. The findings are in like manner to past studies results [2,13,26,30,40,50,52,67].…”

“…In the same vein, Acar, Çalıyurt, and Zengin-Karaibrahimoglu [2] conducted an empirical study and discovered that companies that have more state ownership have a higher level of environmental disclosures. As well, Rafique, Malik, Waheed, and Khan [73] discovered in their study a favourable nexus between environmental disclosure and directors' independent as well as the board size.…”

Does ESG Disclosure Influence Firm Performance?

“…In recent years, the concept of ESG disclosure has become a hot topic not only for academia but also for practitioners and international standard-setters [15][16][17]. Among all the studies, a great part of the extant literature has focused on the impact of ESG disclosure on the firm performance or on how a single pillar of the ESG affects the firm performance [3,18,19].…”

Does corporate governance affect environmental reporting?

“…Insider share is an instrument that aligns the benefits of stockholders and administrators (Acar et al, 2021;Kilincarslan et al, 2020;Akhtaruddin et al, 2009). The concept of agency indicates that when there is different of proprietorship and regulator of a bank, probable agency charges arise due to conflicts of interest among the constricting parties.…”

“…There is indication that securities regulators and those setting accounting standards are progressively conscious of the reputation of being communally and ecologically accountable (Sobhani et al, 2009). Previous studies have been conducted on this aspect (Acar et al, 2021;Kilincarslan et al, 2020;Hussain et al, 2018;Samahaa et al, 2015;Janggu et al, 2014;Jizi et al, 2014;Allegrini and Greco, 2013;Ntim et al, 2013;Kathyayini et al, 2012;Haji, 2012;Akhtaruddin and Rouf, 2012).…”