Top

Journal of Business Ethics

Published in:

01-08-2013

From Voluntarism to Regulation: A Study on Ownership, Economic Performance and Corporate Environmental Information Disclosure in China

Authors: X. H. Meng, S. X. Zeng, C. M. Tam

Published in: Journal of Business Ethics | Issue 1/2013

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

This article examines whether economic performance could affect EID and how the relationship is determined by the form of ownership from voluntarism to regulation under the current Chinese context. In this study, our empirical results show that the relationship between firms’ performance and EID is complex and the interactive impact of ownership and economic performance on EID significantly varies from voluntary disclosure to mandatory disclosure. This study provides a more comprehensive understanding of the motivations in corporate EID. The performance–impression theory can be used to explain the disclosure behaviors during the period of voluntary disclosure, while the pressure–legitimacy theory can be used during the period of mandatory disclosure. The finding suggests that when evaluating corporate EID associated with economic performance in emerging economies such as China, it needs to be cautious, as which tends to vary with the form of ownership and whether there is any mandatory regulation in place.

previous article The Relationship of Downward Mobbing with Leadership Style and Organizational Attitudes

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Based on Industry Classification Guidance of Listed Companies issued by the China Securities Regulatory Commission in April 2001.

Guide to Environmental Information Disclosure for Listed Companies issued on May 14, 2008.

See more details discussed by Petersen (2009). Programming advice and code is accessible in Petersen’s Web page (www.kellogg.northwestern.edu/faculty/petersen/htm/papers/se/se_programming.htm).

If not disclose the exceeding emissions or not accord to the rules of environmental disclosure by SEPA, the firms will be fined not more than 100,000 yuan RMB and exposed by environmental authority. In the regulation of Shanghai Stock Exchange, if the listed companies do not timely, accurately, and completely disclose relevant environmental information in accordance with the requirements, the persons in charge and their firm would be punished according to the extent of violation.

The authors would like to thank one of anonymous referees for his suggestion.

Abbott, W. F., & Monsen, R. J. (1979). On the measurement of corporate social responsibility: Self-reported disclosures as a method of measuring corporate social involvement. Academy of Management Journal, 22(3), 501–515.CrossRef

Aiken, L., & West, S. (1991). Multiple regression: Testing and interpreting interactions. London: Sage.

Al-Tuwaijri, S. A., Christensen, T. E., & Hughes, H. E. (2004). The relations among environmental disclosure, environmental performance, and economic performance: A simultaneous equations approach. Accounting, Organizations and Society, 29(5–6), 447–471.CrossRef

Barth, M. E., McNichols, M. F., & Wilson, G. P. (1997). Factors influencing firms’ disclosures about environmental liabilities. Review of Accounting Studies, 2(1), 35–66.CrossRef

Bewley, K., & Li, Y. (2000). Disclosure of environmental information by Canadian manufacturing companies: A voluntary disclosure perspective. Advances in Environmental Accounting & Management, 1(1), 201–226.CrossRef

Blacconiere, W. G., & Patten, D. M. (1994). Environmental disclosures, regulatory costs and changes in firm value. Journal of Accounting and Economics, 18(3), 357–377.CrossRef

Boesso, G., & Kumar, K. (2007). Drivers of corporate voluntary disclosure: A framework and empirical evidence from Italy and the United States. Accounting, Auditing & Accountability Journal, 20(2), 269–296.CrossRef

Botosan, C. A. (1997). Disclosure level and the cost of equity capital. Accounting Review, 72(3), 323–349.

Bowman, E. H., & Haire, M. (1975). A strategic posture towards corporate social responsibility. California Management Review, 18(2), 49–58.CrossRef

Brammer, S., & Pavelin, S. (2006). Voluntary environmental disclosures by large UK companies. Journal of Business Finance & Accounting, 33(7–8), 1168–1188.CrossRef

Brammer, S., & Pavelin, S. (2008). Factors influencing the quality of corporate environmental disclosure. Business Strategy and the Environment, 17(2), 120–136.CrossRef

Branco, M. C., & Rodrigues, L. L. (2008). Factors influencing social responsibility disclosure by Portuguese companies. Journal of Business Ethics, 83(4), 685–701.CrossRef

Brown, S., & Hillegeist, S. A. (2006). How disclosure quality affects the long-run level of information asymmetry. INSEAD Working Paper. Retrieved from SSRN http://ssrn.com/abstract=297371. Accessed 23 Jan 2006.

Campbell, D. (2000). Legitimacy theory or managerial reality construction? corporate social disclosure in Marks and Spencer Plc corporate reports, 1969–1997. Accounting Forum, 24(1), 80–100.CrossRef

Celik, O., Ecer, A., & Karabacak, H. (2006). Disclosure of forward looking information: Evidence from listed companies on Istanbul Stock Exchange (ISE). Investment Management and Financial Innovations, 3(2), 197–216.

Chau, G. K., & Gray, S. J. (2002). Ownership structure and corporate voluntary disclosure in Hong Kong and Singapore. The International Journal of Accounting, 37(2), 247–265.CrossRef

Chen, C. J. P., & Jaggi, B. (2000). Association between independent non-executive directors, family control and financial disclosures in Hong Kong. Journal of Accounting and Public Policy, 19(4–5), 285–310.CrossRef

Child, J., & Tsai, T. (2005). The dynamic between firms’ environmental strategies and institutional constraints in emerging economies: Evidence from China and Taiwan. Journal of Management Studies, 42(1), 95–125.CrossRef

Cho, C. H., & Patten, D. M. (2007). The role of environmental disclosures as tools of legitimacy: A research note. Accounting, Organizations and Society, 32(7–8), 639–647.CrossRef

Clark, B. (1991). Political economy: A comparative approach. New York: Praeger.

Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(4–5), 303–327.CrossRef

Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2011a). Does it really pay to be green? Determinants and consequences of proactive environmental strategies. Journal of Accounting and Public Policy, 30(2), 122–144.CrossRef

Clarkson, P. M., Overell, M. B., & Chapple, L. (2011b). Environmental reporting and its relation to corporate environmental performance. Abacus, 47(1), 27–60.CrossRef

Cormier, D., & Gordon, I. M. (2001). An examination of social and environmental reporting strategies. Accounting, Auditing and Accountability Journal, 14(5), 587–616.CrossRef

Cormier, D., & Magnan, M. (1999). Corporate environmental disclosure strategies: Determinants, costs and benefits. Journal of Accounting, Auditing & Finance, 14(4), 429–451.

Darnall, N., Henriques, I., & Sadorsky, P. (2010). Adopting proactive environmental strategy: The influence of stakeholders and firm size. Journal of Management Studies, 47(6), 1072–1094.CrossRef

Dawkins, C. E., & Fraas, J. W. (2010). Erratum to: beyond acclamations and excuses: Environmental performance, voluntary environmental disclosure and the role of visibility. Journal of Business Ethics, 99(3), 383–397.CrossRef

de Villiers, C., & van Staden, C. J. (2010). Shareholders’ requirements for corporate environmental disclosures: A cross country comparison. The British Accounting Review, 42(4), 227–240.CrossRef

Deegan, C. (2002). The legitimising effect of social and environmental disclosures—A theoretical foundation. Accounting, Auditing & Accountability Journal, 15(6), 282–311.CrossRef

Deegan, C., & Gordon, B. (1996). A study of the environmental disclosure practices of Australian corporations. Accounting and Business Research, 26(3), 187–199.CrossRef

Deegan, C., & Rankin, M. (1996). Do Australian companies report environmental news objectively? Accounting, Auditing & Accountability Journal, 9(2), 50–67.CrossRef

Dierkes, M., & Preston, L. E. (1977). Corporate social accounting reporting for the physical environment: A critical review and implementation proposal. Accounting, Organizations and Society, 2(1), 3–22.CrossRef

Eng, L. L., & Mak, Y. T. (2003). Corporate governance and voluntary disclosure. Journal of Accounting and Public Policy, 22(4), 325–345.CrossRef

Fallan, E., & Fallan, L. (2009). Voluntarism versus regulation lessons from public disclosure of environmental performance information in Norwegian companies. Journal of Accounting & Organizational Change, 5(4), 472–489.CrossRef

Fan, G., Wang, X. L., & Zhu, H. P. (2007). The marketization index in China. Beijing: Economy Science Press.

Freedman, M., & Jaggi, B. (1982). Pollution disclosures, pollution performance and economic performance. Omega, 10(2), 167–176.CrossRef

Freedman, M., & Jaggi, B. (1988). An analysis of the association between pollution disclosure and economic performance. Accounting, Auditing and Accountability Journal, 1(2), 43–58.CrossRef

Gray, R., Javad, M., Power, D. M., & Sinclair, C. D. (2001). Social and environmental disclosure and corporate characteristics: A research note and extension. Journal of Business Finance & Accounting, 28(3–4), 327–356.CrossRef

Gray, R., Owen, D., & Adams, C. (1996). Accounting and accountability: Changes and challenges in corporate and social reporting. London: Prentice Hall.

Green, W. H. (2003). Econometric analysis. Upper Saddle River, NJ: Prentice Hall.

Guthrie, J. E., & Parker, L. D. (1990). Corporate social disclosure practice: A comparative international analysis. Advances in Public Interest Accounting, 3(3), 159–176.

Healy, P. M., Hutton, A. P., & Palepu, K. G. (1999). Stock performance and intermediation changes surrounding sustained increases in disclosure. Contemporary Accounting Research, 16(3), 485–520.CrossRef

Huang, C. L., & Kung, K. H. (2010). Drivers of environmental disclosure and stakeholder expectation: Evidence from Taiwan. Journal of Business Ethics, 96(2), 435–451.CrossRef

Huang, Q. H., Peng, H. G., Zhong, H. W., & Zhang, E. (2009). Social responsibility index for the top 100 Chinese enterprises. Beijing: Research Center for Corporate Social Responsibility, Chinese Academy of Social Sciences.

Hughes, S., Anderson, A., & Golden, S. (2001). Corporate environmental disclosures: Are they useful in determining environmental performance? Journal of Accounting and Public Policy, 20(3), 217–240.CrossRef

Karim, K. E., Lacina, M. J., & Rutledge, R. W. (2006). The association between firm characteristics and the level of environmental disclosure in financial statement footnotes. Advances in Environmental Accounting & Management, 3(3), 77–109.CrossRef

Kennedy, P. (2003). A guide to economics. Cambridge, MA: MIT Press.

Kock, C. J., Santaló, J., & Diestre, L. (2012). Corporate governance and the environment: What type of governance creates greener companies. Journal of Management Studies, 49(3), 492–514.CrossRef

Laidroo, L. (2009). Association between ownership structure and public announcements’ disclosures. Corporate Governance: An International Review, 17(1), 13–34.CrossRef

Lang, M., & Lundholm, R. (1993). Cross-sectional determinants of analyst ratings of corporate disclosures. Journal of Accounting Research, 31(2), 246–271.CrossRef

Leary, M. R., & Kowalski, R. M. (1990). Impression management: A literature review and two component model. Psychological Bulletin, 107(1), 34–47.CrossRef

Lee, T. M., & Hutchison, P. D. (2005). The decision to disclose environmental information: A research review and agenda. In P. M. J. Reckers, et al. (Eds.), Advances in accounting (Vol. 21, pp. 83–111). New York: JAI Press.

Lehman, C., & Tinker, T. (1987). The ‘real’ cultural significance of accounts. Accounting, Organizations and Society, 12(5), 503–522.CrossRef

Li, Y. (1997). Corporate disclosure of environmental liability information: Theory and evidence. Contemporary Accounting Research, 14(3), 435–474.CrossRef

Li, Y., & McConomy, B. (1999). An empirical examination of factors affecting the timing of environmental accounting standard adoption and the impact on corporate valuation. Journal of Accounting, Auditing and Finance, 14(3), 279–313.

Li, W., & Zhang, R. (2010). Corporate social responsibility, ownership structure, and political interference: Evidence from China. Journal of Business Ethics, 96(4), 631–645.CrossRef

Liu, X., & Anbumozhi, V. (2009). Determinant factors of corporate environmental information disclosure: An empirical study of Chinese listed companies. Journal of Cleaner Production, 17(6), 593–600.CrossRef

Magness, V. (2006). Strategic posture, financial performance and environmental disclosure: An empirical test of legitimacy theory. Accounting, Auditing & Accountability Journal, 19(4), 540–563.CrossRef

Makhija, A. K., & Patton, J. M. (2004). The impact of firm ownership structure on voluntary disclosure: Empirical evidence from Czech annual reports. Journal of Business, 77(3), 457–491.CrossRef

Meng, X. H., Zeng, S. X., Tam, C. M., & Xu, X. D. (2012). Whether top executives’ turnover influences environmental responsibility: From the perspective of environmental information disclosure. Journal of Business Ethics. doi:10.1007/s10551-012-1351-1.

Montabon, F., Sroufe, R., & Narasimhan, R. (2007). An examination of corporate reporting, environmental management practices and firm performance. Journal of Operations Management, 25(5), 998–1014.CrossRef

Neu, D., Warsame, H., & Pedwell, K. (1998). Managing public impressions: Environmental disclosures in annual reports. Accounting, Organizations and Society, 23(3), 265–282.CrossRef

Niskanen, J., & Nieminen, T. (2001). The objectivity of corporate environmental reporting: A study of Finnish listed firms’ environmental disclosures. Business Strategy and the Environment, 10(1), 29–37.CrossRef

Patten, D. M. (2002). The relation between environmental performance and environmental disclosure: A research note. Accounting, Organizations and Society, 27(8), 763–773.CrossRef

Patten, D. M. (2005). The accuracy of financial report projections of future environmental capital expenditures: A research note. Accounting, Organizations and Society, 30(5), 457–468.CrossRef

Petersen, M. (2009). Estimating standard errors in finance panel data sets: Comparing approaches. The Review of Financial Studies, 22(1), 435–480.CrossRef

Prencipe, A. (2004). Proprietary costs and determinants of voluntary segment disclosure: Evidence from Italian listed companies. European Accounting Review, 13(2), 319–340.CrossRef

Preston, L. E. (1978). Analyzing corporate social performance: Methods and results. Journal of Contemporary Business, 7(1), 135–149.

Ramanathan, K. V. (1976). Toward a theory of corporate social accounting. The Accounting Review, 51(3), 516–528.

Richardson, A. J., & Welker, M. (2001). Social disclosure, financial disclosure and the cost of equity capital. Accounting, Organizations and Society, 26(7–8), 597–616.CrossRef

Roberts, P. W., & Dowling, G. R. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23(12), 1077–1093.CrossRef

Saleh, M., Zulkifli, N., & Muhamad, M. (2010). Corporate social responsibility disclosure and its relation on institutional ownership: Evidence from public listed companies in Malaysia. Managerial Auditing Journal, 25(6), 591–613.CrossRef

Sengupta, P. (1998). Corporate disclosure quality and the cost of debt. Accounting Review, 73(4), 459–474.

SEPA. (2010). Environmental information disclosure guidelines for listed companies in China. Retrieved May 10, 2010, from http//:www.mep.gov.cn/gkml/.

Stanwick, S. D., & Stanwick, P. A. (2000). The relationship between environmental disclosures and financial performance: An empirical study of US firms. Eco-Management and Auditing, 7(4), 155–164.CrossRef

Stead, W. E., & Stead, J. G. (1992). Management for a small planet: Strategic decision making and environmental. Newbury Park, CA: Sage.

Sun, Z., Li, Z. Q., & Wang, J. B. (2006). Nature of ownership, debt covenants and accounting information: Evidences from Chinese listed companies. Management World, 10, 100–149 (in Chinese).

Sun, Y., Sun, L. Y., & Lian, J. (2009). The effect of ownership and firm size on environmental information disclosure towards Chinese listed companies. Social Science Front, 2, 55–60 (in Chinese).

Toms, J. S. (2002). Company resources, quality signals and the determinants of corporate environmental reputation: Some UK evidence. The British Accounting Review, 34(3), 257–282.CrossRef

Ullmann, A. A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of Management Review, 10(3), 540–557.

Wang, H., Bi, J., Wheeler, D., Wang, J. N., Cao, D., Lu, G. F., et al. (2004). Environmental performance rating and disclosure: China’s green watch program. Journal of Environmental Management, 71, 123–133.CrossRef

Williams, S. M. (1999). Voluntary environmental and social accounting disclosure practices in the Asia-Pacific region: An international empirical test of political economy theory. The International Journal of Accounting, 34(2), 209–238.CrossRef

Wilmshurst, T. M., & Frost, G. R. (2000). Corporate environmental reporting: A test of legitimacy theory. Accounting Auditing & Accountability Journal, 13(1), 10–26.CrossRef

Wiseman, J. (1982). An evaluation of environmental disclosures made in corporate annual reports. Accounting, Organizations and Society, 7(1), 53–63.CrossRef

Wooldridge, J. M. (2003). Introductory econometrics: A modern approach. Beijing: China Renmin University Press.

Xiao, J. Z., Yang, H., & Chow, C. W. (2004). The determinants and characteristics of voluntary internet-based disclosures by listed Chinese companies. Journal of Accounting and Public Policy, 23(3), 191–225.CrossRef

Xu, X. D., Zeng, S. X., & Tam, C. M. (2012). Stock market’s reaction to disclosure of environmental violation: Evidence from China. Journal of Business Ethics, 107(2), 227–237.CrossRef

Zeng, S. X., Liu, H. C., Tam, C. M., & Shao, Y. K. (2008). Cluster analysis for studying industrial sustainability: An empirical study in Shanghai. Journal of Cleaner Production, 16(10), 1090–1097.CrossRef

Zeng, S. X., Tam, C. M., Deng, Z. M., & Tam, V. W. Y. (2003). ISO 14000 and the construction industry: Survey in China. Journal of Management in Engineering, 19(3), 107–115.CrossRef

Zeng, S. X., Xu, X. D., Dong, Z. Y., & Tam, V. W. Y. (2010). Towards corporate environmental information disclosure: An empirical study in China. Journal of Cleaner Production, 18(12), 1142–1148.CrossRef

Zeng, S. X., Xu, X. D., Yin, H. T., & Tam, C. M. (2011). Factors that drive Chinese listed companies in voluntary disclosure of environmental information. Journal of Business Ethics. doi:10.1007/s10551-011-1129-x.

Title: From Voluntarism to Regulation: A Study on Ownership, Economic Performance and Corporate Environmental Information Disclosure in China
Authors: X. H. Meng
S. X. Zeng
C. M. Tam
Publication date: 01-08-2013
Publisher: Springer Netherlands
Published in: Journal of Business Ethics / Issue 1/2013
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-012-1462-8

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Other articles of this Issue 1/2013

Women in the Boardroom: How Do Female Directors of Corporate Boards Perceive Boardroom Dynamics?

The Impact of Operational Diversity on Corporate Philanthropy: An Empirical Study of U.S. Companies

The Determinants of Green Product Development Performance: Green Dynamic Capabilities, Green Transformational Leadership, and Green Creativity

Sustainable Supply Chains: Governance Mechanisms to Greening Suppliers

Rationalizing Ideologies, Social Identities and Corruption Among Civil Servants in Indonesia During the Suharto Era

Black Economic Empowerment Disclosures by South African Listed Corporations: The Influence of Ownership and Board Characteristics