IDEAS home Printed from https://ideas.repec.org/a/wly/corsem/v22y2015i6p346-361.html
   My bibliography  Save this article

Environmental Reporting: Transparency to Stakeholders or Stakeholder Manipulation? An Analysis of Disclosure Tone and the Role of the Board of Directors

Author

Listed:
  • Claudia Arena
  • Saverio Bozzolan
  • Giovanna Michelon

Abstract

We study whether environmental reporting serves as a transparency tool to communicate sound environmental policies to stakeholders or rather as a manipulation tool of stakeholders' perceptions. In particular, we focus on the relationship between environmental disclosure tone and future environmental performance and we furthermore explore the role of the board of directors' monitoring and stakeholder orientation in shaping this relationship. Using a sample of 288 US oil and gas firms, we find that the bias towards positive language does not reflect purely opportunistic managerial reasons, but rather is a transparency tool to signal future environmental performance. In addition, we document that the stakeholder orientation of the board plays a transparency role in communicating the firm's superior performance. Our findings contribute to the debate on whether discretionary strategies in environmental reporting are more about increased transparency or about stakeholder manipulation. Moreover, they help investors and policymakers to interpret managers' language choices. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment.

Suggested Citation

  • Claudia Arena & Saverio Bozzolan & Giovanna Michelon, 2015. "Environmental Reporting: Transparency to Stakeholders or Stakeholder Manipulation? An Analysis of Disclosure Tone and the Role of the Board of Directors," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(6), pages 346-361, November.
    • Handle: RePEc:wly:corsem:v:22:y:2015:i:6:p:346-361
    DOI: 10.1002/csr.1350
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/csr.1350
    Download Restriction: no
    File URL: https://libkey.io/10.1002/csr.1350?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. José V. Frias‐Aceituno & Lazaro Rodriguez‐Ariza & I.M Garcia‐Sanchez, 2013. "The Role of the Board in the Dissemination of Integrated Corporate Social Reporting," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(4), pages 219-233, July.
    2. Aishah Sheikh Abu Bakar & Rashid Ameer, 2011. "Readability of Corporate Social Responsibility communication in Malaysia," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 18(1), pages 50-60, January.
    3. Michelle Rodrigue & Michel Magnan & Charles Cho, 2013. "Is Environmental Governance Substantive or Symbolic? An Empirical Investigation," Journal of Business Ethics, Springer, vol. 114(1), pages 107-129, April.
    4. Sónia Maria da Silva Monteiro & Beatriz Aibar‐Guzmán, 2010. "Determinants of environmental disclosure in the annual reports of large companies operating in Portugal," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 17(4), pages 185-204, July.
    5. Michael John Jones, 2011. "The nature, use and impression management of graphs in social and environmental accounting," Accounting Forum, Taylor & Francis Journals, vol. 35(2), pages 75-89, June.
    6. David Campbell, 2003. "Intra‐ and intersectoral effects in environmental disclosures: evidence for legitimacy theory?," Business Strategy and the Environment, Wiley Blackwell, vol. 12(6), pages 357-371, November.
    7. Amy J. Hillman & Albert A. Cannella & Ramona L. Paetzold, 2000. "The Resource Dependence Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change," Journal of Management Studies, Wiley Blackwell, vol. 37(2), pages 235-256, March.
    8. Patten, Dennis M., 2002. "The relation between environmental performance and environmental disclosure: a research note," Accounting, Organizations and Society, Elsevier, vol. 27(8), pages 763-773, November.
    9. Bert Scholtens & Feng‐Ching Kang, 2013. "Corporate Social Responsibility and Earnings Management: Evidence from Asian Economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(2), pages 95-112, March.
    10. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    11. Stephen Brammer & Stephen Pavelin, 2008. "Factors influencing the quality of corporate environmental disclosure," Business Strategy and the Environment, Wiley Blackwell, vol. 17(2), pages 120-136, February.
    12. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    13. Neu, D. & Warsame, H. & Pedwell, K., 1998. "Managing public impressions: environmental disclosures in annual reports," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 265-282, April.
    14. Pugliese, A. & Bezemer, P.J. & Zattoni, A. & Huse, M. & van den Bosch, F.A.J. & Volberda, H.W., 2009. "Boards of Directors’ Contribution to Strategy: A Literature Review and Research Agenda," ERIM Report Series Research in Management ERS-2009-013-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    15. Angela K. Davis & Jeremy M. Piger & Lisa M. Sedor, 2012. "Beyond the Numbers: Measuring the Information Content of Earnings Press Release Language," Contemporary Accounting Research, John Wiley & Sons, vol. 29(3), pages 845-868, September.
    16. Shuili Du & Edward Vieira, 2012. "Striving for Legitimacy Through Corporate Social Responsibility: Insights from Oil Companies," Journal of Business Ethics, Springer, vol. 110(4), pages 413-427, November.
    17. Paul Mather & Alan Ramsay, 2007. "Do Board Characteristics Influence Impression Management through Graph Selectivity Around CEO Changes?," Australian Accounting Review, CPA Australia, vol. 17(42), pages 84-95, July.
    18. Abeer Hassan & Essam Ibrahim, 2012. "Corporate Environmental Information Disclosure: Factors Influencing Companies' Success in Attaining Environmental Awards," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 19(1), pages 32-46, January.
    19. Christine Mallin & Giovanna Michelon & Davide Raggi, 2013. "Monitoring Intensity and Stakeholders’ Orientation: How Does Governance Affect Social and Environmental Disclosure?," Journal of Business Ethics, Springer, vol. 114(1), pages 29-43, April.
    20. Christina L. Anderson & Rebecca L. Bieniaszewska, 2005. "The role of corporate social responsibility in an oil company's expansion into new territories," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 12(1), pages 1-9, March.
    21. Cho, Charles H. & Patten, Dennis M., 2007. "The role of environmental disclosures as tools of legitimacy: A research note," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 639-647.
    22. Doris M. Merkl-Davies & Niamh Brennan, 2007. "Discretionary disclosure strategies in corporate narratives : incremental information or impression management?," Open Access publications 10197/2907, Research Repository, University College Dublin.
    23. Lucia Silva‐Gao, 2012. "The Disclosure of Environmental Capital Expenditures: Evidence from the Electric Utility Sector in the USA," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 19(4), pages 240-252, July.
    24. Jose‐Manuel Prado‐Lorenzo & Isabel Gallego‐Alvarez & Isabel M. Garcia‐Sanchez, 2009. "Stakeholder engagement and corporate social responsibility reporting: the ownership structure effect," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 16(2), pages 94-107, March.
    25. Cho, Charles H. & Roberts, Robin W. & Patten, Dennis M., 2010. "The language of US corporate environmental disclosure," Accounting, Organizations and Society, Elsevier, vol. 35(4), pages 431-443, May.
    26. Giovanna Michelon & Antonio Parbonetti, 2012. "The effect of corporate governance on sustainability disclosure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(3), pages 477-509, August.
    27. Jones, Michael John, 2011. "The nature, use and impression management of graphs in social and environmental accounting," Accounting forum, Elsevier, vol. 35(2), pages 75-89.
    28. Carmelo Reverte, 2012. "The Impact of Better Corporate Social Responsibility Disclosure on the Cost of Equity Capital," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 19(5), pages 253-272, September.
    29. Richard Welford, 2007. "Corporate governance and corporate social responsibility: issues for Asia," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 14(1), pages 42-51, February.
    30. Elizabeth Stanny, 2013. "Voluntary Disclosures of Emissions by US Firms," Business Strategy and the Environment, Wiley Blackwell, vol. 22(3), pages 145-158, March.
    31. Kenneth Roeck & Nathalie Delobbe, 2012. "Do Environmental CSR Initiatives Serve Organizations’ Legitimacy in the Oil Industry? Exploring Employees’ Reactions Through Organizational Identification Theory," Journal of Business Ethics, Springer, vol. 110(4), pages 397-412, November.
    32. Heledd Jenkins, 2004. "Corporate social responsibility and the mining industry: conflicts and constructs," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 11(1), pages 23-34, March.
    33. Shihping Kevin Huang, 2013. "The Impact of CEO Characteristics on Corporate Sustainable Development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(4), pages 234-244, July.
    34. Maria Joutsenvirta, 2009. "A language perspective to environmental management and corporate responsibility," Business Strategy and the Environment, Wiley Blackwell, vol. 18(4), pages 240-253, May.
    35. Hayam Wahba, 2008. "Exploring the moderating effect of financial performance on the relationship between corporate environmental responsibility and institutional investors: some Egyptian evidence," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 15(6), pages 361-371, November.
    36. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    37. Angela K. Davis & Isho Tama†Sweet, 2012. "Managers’ Use of Language Across Alternative Disclosure Outlets: Earnings Press Releases versus MD&A," Contemporary Accounting Research, John Wiley & Sons, vol. 29(3), pages 804-837, September.
    38. Christine A. Mallin & Giovanna Michelon, 2011. "Board reputation attributes and corporate social performance: an empirical investigation of the US Best Corporate Citizens," Accounting and Business Research, Taylor & Francis Journals, vol. 41(2), pages 119-144, June.
    39. García Osma, Beatriz & Guillamón-Saorín, Encarna, 2011. "Corporate governance and impression management in annual results press releases," Accounting, Organizations and Society, Elsevier, vol. 36(4), pages 187-208.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michelon, Giovanna & Pilonato, Silvia & Ricceri, Federica, 2015. "CSR reporting practices and the quality of disclosure: An empirical analysis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 33(C), pages 59-78.
    2. García-Sánchez, Isabel-María & Suárez-Fernández, Oscar & Martínez-Ferrero, Jennifer, 2019. "Female directors and impression management in sustainability reporting," International Business Review, Elsevier, vol. 28(2), pages 359-374.
    3. Renato Camodeca & Alex Almici & Umberto Sagliaschi, 2018. "Sustainability Disclosure in Integrated Reporting: Does It Matter to Investors? A Cheap Talk Approach," Sustainability, MDPI, vol. 10(12), pages 1-34, November.
    4. Camélia Radu & Claude Francoeur, 2017. "Does Innovation Drive Environmental Disclosure? A New Insight into Sustainable Development," Business Strategy and the Environment, Wiley Blackwell, vol. 26(7), pages 893-911, November.
    5. Eduardo Ortas & Isabel Gallego‐Alvarez & Igor Álvarez Etxeberria, 2015. "Financial Factors Influencing the Quality of Corporate Social Responsibility and Environmental Management Disclosure: A Quantile Regression Approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(6), pages 362-380, November.
    6. Amama Shaukat & Yan Qiu & Grzegorz Trojanowski, 2016. "Board Attributes, Corporate Social Responsibility Strategy, and Corporate Environmental and Social Performance," Journal of Business Ethics, Springer, vol. 135(3), pages 569-585, May.
    7. Charles H. Cho & Matias Laine & Robin W. Roberts & Michelle Rodrigue, 2018. "The Frontstage and Backstage of Corporate Sustainability Reporting: Evidence from the Arctic National Wildlife Refuge Bill," Journal of Business Ethics, Springer, vol. 152(3), pages 865-886, October.
    8. Emerald Edem Welbeck & Godfred Matthew Yaw Owusu & Rita Amoah Bekoe & John Amoah Kusi, 2017. "Determinants of environmental disclosures of listed firms in Ghana," International Journal of Corporate Social Responsibility, Springer, vol. 2(1), pages 1-12, December.
    9. Christine Mallin & Giovanna Michelon & Davide Raggi, 2013. "Monitoring Intensity and Stakeholders’ Orientation: How Does Governance Affect Social and Environmental Disclosure?," Journal of Business Ethics, Springer, vol. 114(1), pages 29-43, April.
    10. Isabel‐María García‐Sánchez & Cristina‐Andrea Araújo‐Bernardo, 2020. "What colour is the corporate social responsibility report? Structural visual rhetoric, impression management strategies, and stakeholder engagement," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 1117-1142, March.
    11. Michelle Rodrigue & Michel Magnan & Charles Cho, 2013. "Is Environmental Governance Substantive or Symbolic? An Empirical Investigation," Journal of Business Ethics, Springer, vol. 114(1), pages 107-129, April.
    12. Jiang, Yan & Luo, Le & Xu, JianFeng & Shao, XiaoRui, 2021. "The value relevance of corporate voluntary carbon disclosure: Evidence from the United States and BRIC countries," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(3).
    13. Roberto Fernández‐Gago & Laura Cabeza‐García & Mariano Nieto, 2018. "Independent directors' background and CSR disclosure," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(5), pages 991-1001, September.
    14. Nurlan Orazalin & Mady Baydauletov, 2020. "Corporate social responsibility strategy and corporate environmental and social performance: The moderating role of board gender diversity," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1664-1676, July.
    15. Ishmael Tingbani & Lyton Chithambo & Venancio Tauringana & Nikolaos Papanikolaou, 2020. "Board gender diversity, environmental committee and greenhouse gas voluntary disclosures," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2194-2210, September.
    16. Mitzi Cubilla‐Montilla & Ana‐Belén Nieto‐Librero & Ma Purificación Galindo‐Villardón & Ma Purificación Vicente Galindo & Isabel‐María Garcia‐Sanchez, 2019. "Are cultural values sufficient to improve stakeholder engagement human and labour rights issues?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(4), pages 938-955, July.
    17. Nurlan Orazalin, 2020. "Do board sustainability committees contribute to corporate environmental and social performance? The mediating role of corporate social responsibility strategy," Business Strategy and the Environment, Wiley Blackwell, vol. 29(1), pages 140-153, January.
    18. Jennifer Martínez‐Ferrero & Oscar Suárez‐Fernández & Isabel‐María García‐Sánchez, 2019. "Obfuscation versus enhancement as corporate social responsibility disclosure strategies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(2), pages 468-480, March.
    19. Laura Sierra-Garcia & Maria Antonia Garcia-Benau & Helena Maria Bollas-Araya, 2018. "Empirical Analysis of Non-Financial Reporting by Spanish Companies," Administrative Sciences, MDPI, vol. 8(3), pages 1-17, July.
    20. Claudia Arena & Giovanna Michelon, 2018. "A matter of control or identity? Family firms' environmental reporting decisions along the corporate life cycle," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1596-1608, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:corsem:v:22:y:2015:i:6:p:346-361. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1535-3966 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.