Environmental disclosure and idiosyncratic risk in the European manufacturing sector

Tzouvanas, Panagiotis; Kizys, Renatas; Chatziantoniou, Ioannis; Sagitova, Roza

doi:10.1016/j.eneco.2020.104715

Cited by 52 publications

(45 citation statements)

References 95 publications

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“…A few researchers examined the relationship between ECSR and idiosyncratic risk from the perspective of environmental protection. The results show that high-quality environmental information disclosure can reduce the information asymmetry between firms and participants in securities market and can decrease firms' idiosyncratic risk (Benlemlih et al, 2018;Tzouvanas et al, 2020). However, these studies focus on the developed countries and states in Europe such as Britain, and measures of ECSR are from a single perspective.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…Following Ang et al (2006) and Tzouvanas et al (2020), we use the Fama-French three-factor model to estimate the idiosyncratic risk:…”

Section: Measures Of Idiosyncratic Riskmentioning

confidence: 99%

“…On the other hand, high-quality ECSR also plays a positive role in coordinating the relationship between stakeholders (Orlitzky and Benjamin, 2001;Tencati et al, 2004;Connelly et al, 2011;Salama et al, 2011). Therefore, ECSR can send a signal to the public that the company's behavior is legal and that the company attaches importance to environmental protection (Tzouvanas et al, 2020). This signal reduces the degree of information asymmetry, increases the transparency of information, and improves the effectiveness of investors' decision-making.…”

Section: Introductionmentioning

confidence: 99%

“…Mean, standard deviation, Q1, median, Q3, minimum, and maximum of each variable are reported. Our dependent variable (RISK t+1 ) is calculated by Fama-French three-factor model(Ang et al, 2006;Tzouvanas et al, 2020). Following the Luo et al (2019) approach, we use the content score (C-value) released by RKS from 2011 to 2017 as an alternative variable to the level of environmental corporate social responsibility (ECSR t ).…”

mentioning

confidence: 99%

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Can Environmental Corporate Social Responsibility Reduce Firms’ Idiosyncratic Risk? Evidence From China

Kong

Pan

Sun

et al. 2020

Front. Environ. Sci.

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Environmental corporate social responsibility (ECSR) can be a strategy to increase the transparency of investment information effectively to alleviate information asymmetry. The purpose of this article is to examine the impact of ECSR on firms’ idiosyncratic risk. Using the data of A-share listed firms in China and data of Rankins CSR Ratings by developing econometrics models, this study documents that ECSR can significantly reduce the firms’ idiosyncratic risk. This result perpetuates after a series of robustness checks. Besides, the results of conditional analyses reveal that the effect of ECSR is more pronounced for state-owned firms and firms with weaker external monitoring mechanisms and low internal control. Moreover, further evidence suggests that firms with high ECSR show a greater tendency to disclose more information, which reduces the information asymmetry and offers linkages from ESCR to firms’ idiosyncratic risk.

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Section: Hypothesis Developmentmentioning

confidence: 99%

“…Following Ang et al (2006) and Tzouvanas et al (2020), we use the Fama-French three-factor model to estimate the idiosyncratic risk:…”

Section: Measures Of Idiosyncratic Riskmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

See 2 more Smart Citations

Can Environmental Corporate Social Responsibility Reduce Firms’ Idiosyncratic Risk? Evidence From China

Kong

Pan

Sun

et al. 2020

Front. Environ. Sci.

View full text Add to dashboard Cite

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“…As a tool for enterprises to provide information to information users, accounting has the responsibility of providing corporate environmental information. Using existing financial reports to supplement corporate environmental information disclosure is currently the most common way of environmental accounting information disclosure (Lu and Li 2020 ; Pien 2020 ; Tzouvanas et al 2020 ). It increases how supplementary information is disclosed in the company’s annual report (Iatridis 2013 ), listing announcement (Tang et al 2020 ), prospectus (Pan et al 2020 ), and information disclosure in interim reports (Goron 2018 ).…”

Section: Introductionmentioning

confidence: 99%

Trend and relationship between environmental accounting disclosure and environmental performance for mining companies listed in China

Agyemang

Kong

Twum

et al. 2021

Environ Dev Sustain

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Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review

Singhania,

Gupta

2024

Corp Soc Responsibility Env

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While the relationship between ESG disclosures and firm risk has been researched substantially, the results remain inconclusive, and contradictory, as of 2023. Through meta‐analysis, we investigate the effect of ESG disclosures measured by studies using E, S, G, or ESG disclosure on firm risk measured as total, systematic, or idiosyncratic risk with a sample of 76 papers published between 1991 and 2023. To the best of our knowledge, this is the pioneering attempt to investigate the impact of ESG disclosure on firm risk by adopting a meta‐analytical procedure to assess the significance of estimated mean effect size followed by meta‐regression analysis to test the effect of potential moderators. E, S, and G disclosures were found to be inversely related to firm risk as proposed by stakeholder and legitimacy theories. Further, the relationship between ESG disclosures and firm risk was found to be more pronounced for idiosyncratic risk rather than systematic risk. Results confirmed that firm size and female participation significantly moderated the relation between ESG disclosures and the level of firm risk. However, R&D, financial flexibility, disclosure index, and ROA had an insignificant but negative impact on the relationship. Our findings provide solace to managers and policymakers who may increasingly invest in ESG activities without worrying as ESG investing results in reducing firm risk. In addition, to manage risk, portfolio managers may include more stocks of environmentally as well as socially responsible firms in their portfolios. Future studies may suggest new moderators in the field of ESG disclosures and firm risk, thereby broadening the theoretical realm. Subsequent studies should examine the influence of specific environmental concerns such as carbon emissions, as well as social concerns such as gender equality and employee compensation, on stock returns. It contributes to the prevailing debate on ESG disclosures and firm risk nexus as well as attempts to shed light on pertinence of moderators affecting the relationship.

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Environmental disclosure and idiosyncratic risk in the European manufacturing sector

Abstract: Environmental disclosure and idiosyncratic risk in the European manufacturing sector. Energy Economics. a104715.

Cited by 52 publications

References 95 publications

Can Environmental Corporate Social Responsibility Reduce Firms’ Idiosyncratic Risk? Evidence From China

Can Environmental Corporate Social Responsibility Reduce Firms’ Idiosyncratic Risk? Evidence From China

Trend and relationship between environmental accounting disclosure and environmental performance for mining companies listed in China

Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review

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