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The impact of corporate environmental reporting on customer-related performance and market value

Author

Listed:
  • Ikram Radhouane

    (CRET-LOG - Centre de Recherche sur le Transport et la Logistique - AMU - Aix Marseille Université)

  • Mehdi Nekhili

    (GAINS - ARGUMANS - Atelier De Recherche En Gestion De L'université Du Mans - GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université)

  • Haithem Nagati

    (ICD International Business School Paris)

  • Gilles Paché

    (AMU - Aix Marseille Université)

Abstract

Purpose: The purpose of this paper is to illustrate the potential benefits for firms that report more on environmental activities, with regard to two important categories of stakeholders: shareholders and customers. Design/methodology/approach: To avoid the endogeneity problem, the authors apply the system generalized method of moments approach by estimating the relationship between environmental reporting and firm performance with regard both to levels and first differences simultaneously. Findings: Based on the 120 largest publicly traded companies in France from 2007 to 2011, results suggest that shareholders interpret and perceive firms' environmental information disclosure differently than consumers. However, reporting on environmental duties is perceived favorably by both customers and shareholders for firms with better environmental performance. In the same way, an increase in the level of environmental reporting is valuable in terms of customer-related performance (i.e. sales growth and profit margin) and in terms of market value (i.e. Tobin's q) for firms operating in customer proximity industries. In a supplementary analysis, the authors found that, for reporting on climate change (a component of the combined environmental reporting index), positive customer and shareholder perceptions are acquired in particular through superior environmental performance and proximity to the final customer. Research limitations/implications: When reporting on their environmental duties, environmental performance and proximity to the final customers play a critical role for firms in obtaining the necessary support of key stakeholders. Originality/value: To the best of the authors' knowledge, this is the first study to explore the difference between shareholders' and customers' perception of environmental reporting according to firms' environmental performance and to their proximity to the final customer.

Suggested Citation

  • Ikram Radhouane & Mehdi Nekhili & Haithem Nagati & Gilles Paché, 2018. "The impact of corporate environmental reporting on customer-related performance and market value," Post-Print hal-02380574, HAL.
  • Handle: RePEc:hal:journl:hal-02380574
    DOI: 10.1108/MD-03-2017-0272
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    Citations

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    Cited by:

    1. Amit Kumar Gupta & Narain Gupta, 2021. "Environment Practices Mediating the Environmental Compliance and firm Performance: An Institutional Theory Perspective from Emerging Economies," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 22(3), pages 157-178, September.
    2. Ramona Zharfpeykan, 2021. "Representative account or greenwashing? Voluntary sustainability reports in Australia's mining/metals and financial services industries," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 2209-2223, May.
    3. Samuel Jebaraj Benjamin & Zhuoan Feng & Pallab Kumar Biswas, 2023. "Negative Social Media Sentiments and Capital Structure," Capital Markets Review, Malaysian Finance Association, vol. 31(2), pages 1-22.
    4. Ana Paula Perlin & Clandia Maffini Gomes & Francies Diego Motke & Isak Kruglianskas & Felipe Cavalheiro Zaluski, 2022. "Climate Change Mitigation, Adaptation Practices, and Business Performance in Brazilian Industrial Companies," Sustainability, MDPI, vol. 14(18), pages 1-18, September.
    5. Mehdi Nekhili & Amal Boukadhaba & Haithem Nagati, 2021. "The ESG–financial performance relationship: Does the type of employee board representation matter?," Corporate Governance: An International Review, Wiley Blackwell, vol. 29(2), pages 134-161, March.
    6. Marius Sorin Dinca & Mara Madaleno & Mirela Camelia Baba & Gheorghita Dinca, 2019. "Environmental Information Transparency—Evidence from Romanian Companies," Sustainability, MDPI, vol. 11(18), pages 1-22, September.
    7. Fernández-Vázquez, José-Santiago & Sancho-Rodríguez, Ángel, 2020. "Critical discourse analysis of climate change in IBEX 35 companies," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    8. Ayman Hassan Bazhair & Saleh F. A. Khatib & Hamzeh Al Amosh, 2022. "Taking Stock of Carbon Disclosure Research While Looking to the Future: A Systematic Literature Review," Sustainability, MDPI, vol. 14(20), pages 1-24, October.
    9. Omar. A. Alghamdi & Gomaa Agag, 2023. "Unlocking the Power of Reporting: Exploring the Link between Voluntary Sustainability Reporting, Customer Behavior, and Firm Value," Sustainability, MDPI, vol. 15(21), pages 1-18, November.
    10. Charl de Villiers & Jing Jia & Zhongtian Li, 2022. "Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4523-4568, December.
    11. Pablo Arocena & Raquel Orcos & Fedaous Zouaghi, 2021. "The impact of ISO 14001 on firm environmental and economic performance: The moderating role of size and environmental awareness," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 955-967, February.

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