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A theory of environmental risk disclosure

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  • Sinclair-Desgagne, Bernard
  • Gozlan, Estelle

Abstract

The regulation of environmental risks increasingly emphasizes the awareness and empowerment of stakeholders. The success of this approach, however, seems to depend crucially on the quality of environmental disclosures. In this paper we investigate the amount and quality of the information that would be voluntarily delivered to some stakeholder by a potential polluter. We find that information may be hazier when the stakeholder is confident (or naive) a priori, the cost of analyzing the received reports increases little with their complexity, or a polluter's net expected payoff from undertaking an industrial activity that would turn out to be unsafe is small. A worried stakeholder and a low cost of producing more accurate figures, on the other hand, may favor disclosure of high-quality information. By delivering information of very good quality, safe firms can set themselves apart more easily from the dangerous ones the higher the relative ex post payoff from their current industrial activity. The implications of this framework for the scope and design of public programs of environmental disclosure are briefly examined. La réglementation des risques environnementaux met de plus en plus l'accent sur l'information et la responsabilisation des parties prenantes. Le succès de cette approche repose toutefois largement sur la qualité de l'information fournie par les entreprises visées. Cet article porte sur la quantité et la qualité de l'information qui serait volontairement fournie à une partie prenante par un pollueur potentiel. On trouve que cette information sera moins précise lorsque la partie prenante est confiante (voire naïve) a priori, que le coût d'analyse de l'information livrée croît avec la complexité de celle-ci, ou que le revenu attendu par une entreprise se révélant être en non conformité est petit. En revanche, une partie prenante inquiète et un faible coût de production de données précises encouragent la livraison d'une information de

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 45 (2003)
Issue (Month): 2, Supplement 1 (March)
Pages: 377-393

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Handle: RePEc:eee:jeeman:v:45:y:2003:i:2,supplement1:p:377-393

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Web page: http://www.elsevier.com/locate/inca/622870

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  1. In-Koo Cho & David M. Kreps, 1997. "Signaling Games and Stable Equilibria," Levine's Working Paper Archive 896, David K. Levine.
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Cited by:
  1. Anton, Wilma Rose Q., 2005. "The Choice of Management Practices: What Determines the Design of an Environmental Management System?," 2005 Annual meeting, July 24-27, Providence, RI 19503, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Bernard Sinclair-Desgagné, 2004. "Corporate Strategies For Managing Environmental Risk (The International Library Of Environmental Economics And Policy – Volume xx)," CIRANO Working Papers 2004s-43, CIRANO.
  3. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
  4. Johansson-Stenman, Olof, 2006. "Mad Cows, Terrorism and Junk Food: Should Public Policy Reflect Subjective or Objective Risks?," Working Papers in Economics 194, University of Gothenburg, Department of Economics.
  5. Iwata, Hiroki, 2014. "Disclosure of environmental information and investments of firms," MPRA Paper 54784, University Library of Munich, Germany.
  6. Patricia Crifo & Vanina Forget, 2012. "The Economics of Corporate Social Responsibility: A Survey," Working Papers hal-00720640, HAL.
  7. Caroline Orset, 2010. "Irreversible investment and information acquisition under uncertainty," Working Papers 2010/01, INRA, Economie Publique.
  8. Ioannis E. Nikolaou, 2010. "Classifying current social responsibility accounting methods for assisting a dialogue between business and society," Social Responsibility Journal, Emerald Group Publishing, vol. 6(4), pages 562-580, November.
  9. Johnstone, Nick & Labonne, Julien, 2009. "Why do manufacturing facilities introduce environmental management systems? Improving and/or signaling performance," Ecological Economics, Elsevier, vol. 68(3), pages 719-730, January.
  10. Bernard Sinclair-Desgagné & Ingrid Peignier & Nathalie de Marcellis-Warin, 2003. "Informational Regulation of Industrial Safety - An Examination of the U.S. "Local Emergency Planning Committees"," CIRANO Working Papers 2003s-03, CIRANO.
  11. Kessler, Denis, 2008. "Insurance market mechanisms and government interventions," Journal of Banking & Finance, Elsevier, vol. 32(1), pages 4-14, January.
  12. Ioannis Nikolaou & Konstantinos Evangelinos, 2012. "Financial and non-financial environmental information: significant factors for corporate environmental performance measuring," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 4(1), pages 61-77.

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