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Environmental and social disclosures: Link with corporate financial performance

Qiu, Yan and Shaukat, Amama and Tharyan, Rajesh (2016) 'Environmental and social disclosures: Link with corporate financial performance.' The British Accounting Review, 48 (1). pp. 102-116. ISSN 0890-8389

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Abstract

Environmental and social disclosures entail costs, yet increasingly, large listed firms are making higher and better quality disclosures. In this paper we examine the link between a firm's environmental and social disclosures and its profitability and market value. We find that past profitability drives current social disclosures. However, consistent with the existing evidence, we do not find any relation between environmental disclosures and profitability. Further, while prior literature has largely focussed on environmental disclosure, we find that it is the social disclosures that matter to investors. We find that firms that make higher social disclosures have higher market values. Further analysis reveals that this link is driven by higher expected growth rates in the cash flows of such companies. Overall our findings are consistent with the resource based view of the firm and the voluntary disclosure theory, suggesting that firms with greater economic resources make more extensive disclosures which yield net positive economic benefits.

Item Type: Article
Uncontrolled Keywords: Environmental disclosures; Social disclosures; Corporate social responsibility; Corporate financial performance
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Accounting Centre
Depositing User: Jim Jamieson
Date Deposited: 19 May 2016 16:08
Last Modified: 14 Nov 2016 02:00
URI: http://repository.essex.ac.uk/id/eprint/16740

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