Does Environmental Disclosure Relate to Environmental Performance? Reconciling Legitimacy Theory and Voluntary Disclosure Theory
This paper seeks to understand the relationship between corporate environmental disclosure and corporate environmental performance in a Pakistani context. Also, this paper aims to understand whether patterns of environmental disclosure varies between the different categories (good, bad and mixed)...
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| Format: | Article |
| Language: | English |
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Johar Education Society
2017-12-01
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| Series: | Pakistan Journal of Commerce and Social Sciences |
| Subjects: | |
| Online Access: | http://www.jespk.net/publications/410.pdf |
| Summary: | This paper seeks to understand the relationship between corporate environmental
disclosure and corporate environmental performance in a Pakistani context. Also, this
paper aims to understand whether patterns of environmental disclosure varies between the
different categories (good, bad and mixed) of environmental performance. The data were
taken from the annual reports and sustainability reports of 78 sample firms listed on a
Pakistan stock exchange for the year 2014 and 2015. The empirical results indicate that
environmental disclosure is significantly associated with environmental performance. Both
Good performers and Bad performers have increased their level of disclosure toward
environmental concern as compared to mixed performers. The increase in the level of
disclosure by good performers can be explained through the voluntary disclosure theory as
an attempt to differentiate themselves from others. The increase in the level of disclosure
by bad performers can be explained through legitimacy theory as an attempt to change the
public perception. The findings of this paper are of practical importance to the investors
and other regulatory authorities as they should be cautious while interpreting increase in
disclosures related to environmental activities. This study provides empirical evidence that
an increase in environmental disclosure may not be a valid signal to differentiate the Good
and Bad environmental performers. |
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| ISSN: | 1997-8553 2309-8619 |