The impact of ESG disclosures and institutional ownership on market information asymmetry

Siew, Renard; Balatbat, Maria C. A.; Carmichael, David G.

doi:10.1080/16081625.2016.1170100

Cited by 66 publications

(73 citation statements)

References 68 publications

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“…Empirical evidence indicates a negative relation between institutional ownership and voluntary disclosure (Tsamenyi et al, 2007;Samaha et al, 2012;Juhmani, 2013). For example, Siew et al (2016) investigated the effect of environmental, social, and governance disclosures and institutional ownership on information asymmetry. Despite their results showed environmental, social, and governance disclosures and institutional ownership reduce information asymmetry, further analysis indicated that higher levels of institutional ownership weaken this negative relationship.…”

Section: Environmental Disclosure and Institutional Ownershipmentioning

confidence: 99%

Does ownership type affect environmental disclosure?

Acar

Çalıyurt

Karaibrahimoglu

2021

IJCCSM

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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.

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Section: Environmental Disclosure and Institutional Ownershipmentioning

confidence: 99%

Does ownership type affect environmental disclosure?

Acar

Çalıyurt

Karaibrahimoglu

2021

IJCCSM

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“…Managers may use CER and CSR to increase transparency and, consequently, reduce firm risk (Jensen and Meckling 1976). Higher transparency as a result of CSR reduces the information asymmetry between the firm and its external stakeholders (Siew et al, 2016), thus reducing moral hazard and risk (Brammer and Pavelin, 2004;Healy and Palepu, 2001). Prior research suggests that CSR and CER can be positively (Trotman and Bradley, 1981;García-Ayuso and Larrinaga, 2003;Cormier et al, 2005) or negatively (McGuire et al, 1988;Orlitzky and Benjamin, 2001;El Ghoul, 2011;Salama et al, 2011) associated with firm risk.…”

Section: Hypothesis Development 23mentioning

confidence: 99%

“…Previous studies on CER use either the Kinder, Lydenberg or Domini (KLD) database (e.g. Fatemi et al, 2017;Liu et al, 2017;Ng and Rezaee, 2015;Walls et al, 2011), the CER and CSR data provided by Bloomberg (Cho et al, 2013;Jain et al, 2016;Siew et al, 2016), or other databases such as ASSET4 (Haque, 2017;Qiu et al, 2016). However, these databases have no information about the environmental disclosures of Iranian firms.…”

Section: Sampj 124mentioning

confidence: 99%

Environmental disclosure quality and risk: the moderating effect of corporate governance

Rezaee

Alipour

Faraji

et al. 2020

SAMPJ

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Purpose The purpose of this article is to investigate the relationship between environmental disclosure quality (EDQ) and risk and to further examine whether corporate governance (CG) practices moderate this relationship. Design/methodology/approach This study uses a set of unique, hand collected data (from 2011 to 2016) to measure EDQ for a sample of 762 firm-years Iranian listed companies. Ordinary least squares regression analysis is performed in testing hypotheses after controlling for a variety of firm, industry and year effects. Moreover, several analyses are performed to establish the robustness of the findings. Findings The results indicate a negative association between EDQ and firm risk. While board independence moderates this relationship, other CG practices such as CEO duality and board size do not show any effects on the relationship between EDQ and risk. The results remain robust after performing sensitivity tests and under various specifications, including the fixed-effects panel data and Heckman two-stage regressions. Research limitations/implications Results are from a sample of firms from one country. Practical implications The results have implications for policymakers, legislators and corporate executives, as environmental initiatives are gaining more attention worldwide. Social implications Sustainability initiatives in the areas of environmental and social performance and disclosure are gaining global attention. This study addresses the link between firm risk and EDQ. Originality/value This study contributes to the literature by shedding light on the relationship between corporate risk-taking and EDQ in the context of a developing economy.

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“…To explore the relationships between ESG factors and financial performance, accounting scholarship relevant to this area looked into investors' investment strategy. Siew, Balatbat, and Carmichael (2016), for example, investigated the impact of ESG disclosures and institutional ownership on market information asymmetry. The findings showed that ESG disclosures had the potential to affect investors' asset allocation process, suggesting that a regulation of the quality and timing of ESG information would contribute to reducing the gap between more-informed and less-informed investors, thus providing an equal playing field to all stakeholders.…”

Section: Accounting For Sustainability Governance As a Financial Progmentioning

confidence: 99%

Accounting for Sustainability Governance: The Enabling Role of Social and Environmental Accountability Research

Rinaldi

2019

Social and Environmental Accountability Journal

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The impact of ESG disclosures and institutional ownership on market information asymmetry

Cited by 66 publications

References 68 publications

Does ownership type affect environmental disclosure?

Does ownership type affect environmental disclosure?

Environmental disclosure quality and risk: the moderating effect of corporate governance

Accounting for Sustainability Governance: The Enabling Role of Social and Environmental Accountability Research

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