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Eurasian Business Review

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20-01-2022 | Regular Article

Do environmental and emission disclosure affect firms’ performance?

Evidence from sectorial micro data

Authors: Gianni Guastella, Matteo Mazzarano, Stefano Pareglio, Riccardo Christopher Spani

Published in: Eurasian Business Review | Issue 4/2022

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Abstract

This study analyzes the relationship between firms’ financial performance and their environmental performance, with a particular focus on greenhouse gas-intensive industries. Using financial and environmental data of international listed companies from 2011 to 2017, the financial impact of environmental performances was estimated, measured with multiple indicators that take into account disclosure aspects. The analysis was conducted across different industry aggregation levels, namely the entire group of industries, the Global Industry Classification System (GICS) Industry Group, and the GICS Industry. We found that environmental disclosure indexes are mostly not significant after controlling for environmental performance, suggesting that the effect of environmental disclosure on corporate financial performance is limited, if not altogether absent. In contrast, environmental performance seems to play an important role, and that holds even for high-emitting companies. Overall, our results were consistent with the interpretation that financial markets effectively consider the actual environmental performance of listed companies and, only to a minor extent, the quality of their disclosure.

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This type of risk is associated with the costs that can arise when moving towards a less polluting, greener economy (i.e. changes in the regulation, demand shifts, etc.).

ISIN Organization: international securities identification numbers organization.

It can theoretically be negative when short term assets (e) overcome all the other in its numerator: long and short debt value (D, d) plus Market value of equity (E) plus liquidation value of the preferred stock (Sp).

Meaning the equality of market and book value.

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Title: Do environmental and emission disclosure affect firms’ performance?
Evidence from sectorial micro data
Authors: Gianni Guastella
Matteo Mazzarano
Stefano Pareglio
Riccardo Christopher Spani
Publication date: 20-01-2022
Publisher: Springer International Publishing
Published in: Eurasian Business Review / Issue 4/2022
Print ISSN: 1309-4297
Electronic ISSN: 2147-4281
DOI: https://doi.org/10.1007/s40821-021-00195-9

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