Is earnings management associated with corporate environmental disclosure?

Gerged, Ali Meftah; Al‐Haddad, Lara; Al-Hajri, Meshari O.

doi:10.1108/arj-05-2018-0082

Cited by 48 publications

(78 citation statements)

References 95 publications

(130 reference statements)

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“…Other studies might use different disclosure indices and so not be strictly comparable, but the phenomenon observed is consistent with findings of prior CED studies in developing economies and contrasts with studies in developed countries. For example, on the one hand, Shahab et al (2020) reported the mean value of CED among a sample of Chinese listed firms as 17.0%, and Gerged, Al‐Haddad, and Al‐Hajri (2020) found a mean value of 14% in the case of Kuwait. On the other hand, Matisoff, Noonan, and O'Brien (2013), for example, reported a mean value of 81.8% for the United States, and Barbu, Dumontier, Feleagă, and Feleagă (2014) reported 64% in the case of the United Kingdom.…”

Section: Resultsmentioning

confidence: 99%

Is corporate environmental disclosure associated with firm value? A multicountry study of Gulf Cooperation Council firms

2020

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Several studies have found a relationship between corporate social and environmental disclosure and firm value (FV) or accounting profitability. Where environmental disclosure has been the focus, though, only single‐country studies have been published, and most of the previous research concerns the developed world. This study examines the association between corporate environmental disclosure (CED) and FV in the Gulf Cooperation Council (GCC) countries, where CED has been increasing from its previous low base. Findings from a multicountry sample of 500 firm‐year observations using a 55‐item unweighted environmental disclosure index suggest that CED is significantly and positively related to FV as measured by Tobin's Q (TBQ). The relationship is robust to using a weighted version of the disclosure index, individual countries and environmental disclosure subindices. Some evidence of a positive relationship between CED and return on assets is also found, but even where statistically significant, the relationship is much weaker than in the case of TBQ. For empirical and theoretical reasons, we recommend that future studies pay greater attention to market‐based proxies, if possible, when investigating the value relevance of CED in both developed and developing countries. Our results suggest that both managers and policymakers in GCC countries should take a positive view of expanded CED.

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Section: Resultsmentioning

confidence: 99%

Is corporate environmental disclosure associated with firm value? A multicountry study of Gulf Cooperation Council firms

2020

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“…Additionally, in an effort to address any potential endogeneity problems relating to omitted variables, the present study employs a set of firm‐specific factors to control for the studied associations (Wooldridge, 2010), which are selected to be in line with the previous literature (see Al‐Haddad & Whittington, 2019; Crifo & Forget, 2015; Fifka, 2013; Gerged, Al‐Haddad, & Al‐Hajri, 2020; Hassan, Roberts, & Atkins, 2020; Ntim, 2016). The control variables in this study are the firm size (SIZE), leverage (LEV), market to book ratio (MKTB), profitability (ROA) and audit type (BIG4).…”

Section: Methodsmentioning

confidence: 99%

“…For example, Gerged et al (2018) point out that the mean value of CED in nine MENA countries is 13% of the adopted items. Likewise, Gerged, Al‐Haddad, et al (2020) indicate that CED has recorded an average value of 14% in the context of Kuwait. This means that CED is still considered at an early stage in Jordan and the MENA region generally.…”

Section: Empirical Analysismentioning

confidence: 97%

Factors affecting corporate environmental disclosure in emerging markets: The role of corporate governance structures

2020

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This study seeks to examine whether internal corporate governance (CG) mechanisms affect corporate environmental disclosure (CED) in emerging economies. Using a sample of 500 firm‐year observations, this study distinctively applies a linear panel quantile regression (PQR) model to examine the CG–CED nexus in Jordan. This technique is supplemented with conducting a two‐step dynamic generalised method of moment (GMM) model to overcome any potential occurrence of endogeneity problems. This study reports an increasing trend in CED practice among the sampled companies over the period of analysis, yet it is still at an early stage as compared with their developed counterparts. Furthermore, this study suggests that board size, board independence, CEO duality and foreign ownership have positive associations with CED. In contrast, managerial ownership, institutional ownership and ownership concentration are negatively associated with the disclosed amount of environmental information in the Jordanian context. Theoretically, board structures appeared to be more efficient than ownership structures in reducing agency conflicts by addressing the asymmetric gap of information and promoting the disclosure of environmental information. These findings add to the debate about whether ownership structures detrimental to CED in developing economies. Specifically, when it comes to spending money on CED, owners seemed to be more concerned about any reductions in their share of the pie and may, therefore, be less motivated to disclose their companies' environmental information. This paper provides managers, owners and policymakers with a set of context‐specific recommendations related to the crucial need for a more concerted effort to integrate governance and environmental regulations in order to ensure sustainability in emerging markets.

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“…On a global scale, stakeholders have called for increased transparency, greater disclosure and a consistent approach to GHG emissions (Gerged, Cowton, & Beddewela, 2018; Qian & Schaltegger, 2017). Meanwhile, corporations have stated concerns over the cost of GHG emissions disclosures from the perspective of competitive disadvantage and liability exposure (Gerged, Al‐Haddad, & Al‐Hajri, 2020; Weigand & Elsas, 2012). Others urge balancing this approach by taking both costs and benefits into account (Li, Liu, Tang, & Xiong, 2017).…”

Section: Introductionmentioning

confidence: 99%

Mandatory disclosure, greenhouse gas emissions and the cost of equity capital: UK evidence of a U‐shaped relationship

2020

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This paper examines the effects of disclosing greenhouse gas (GHG) information mandatorily on the cost of equity capital (COC) using a longitudinal unbalanced panel database of the United Kingdom's FTSE 350 firms for the period 2011–2016. We use a nonlinear panel quantile regression (PQR) model to examine the relationship between GHG disclosure (GHGD) and COC in the United Kingdom. This technique was supplemented by conducting a two‐step generalised method of moment (GMM) estimation to address any concerns related to the potential existence of endogeneity problems. Our findings suggest that high‐level GHGD appeared to be negatively associated with COC up to a certain level, which is known as the turning point; then, any increase in GHGD is likely to increase the COC. This means that the nonlinear association between GHGD and COC is evidenced in our study and takes a U shape. Likewise, our findings are associative of a moderating effect of the 2013 carbon disclosure regulation (CDR) on the GHGD–COC nexus. We argue that mandatory GHGD and GHG risk are linked so that those companies that are associated with higher GHG risk have a tendency to be better disclosers. Consequently, we urge regulators to design GHGD regulations in a way that mirrors corporate environmental risk and leads to a lower COC in order to align the interests of corporations with those of the society at large.

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Is earnings management associated with corporate environmental disclosure?

Cited by 48 publications

References 95 publications

Is corporate environmental disclosure associated with firm value? A multicountry study of Gulf Cooperation Council firms

Is corporate environmental disclosure associated with firm value? A multicountry study of Gulf Cooperation Council firms

Factors affecting corporate environmental disclosure in emerging markets: The role of corporate governance structures

Mandatory disclosure, greenhouse gas emissions and the cost of equity capital: UK evidence of a U‐shaped relationship

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