Self-regulation and self-presentation in sustainability reporting: Evidence from firms’ voluntary water disclosure

This study examines factors that influence sustainability disclosure decisions using two alternative theoretical frameworks of sustainability reporting: self-regulation theory and self-presentation theory. This study focuses on water disclosure, a key dimension of sustainability reporting, which despite the importance of water, has received relatively little theoretical and empirical attention. Using a large dataset from an established global water survey from 2010 to 2020, we document supportive evidence for the positive relationships between voluntary water disclosure and several self-regulation mechanisms, such as policies and actions on water efficiency and emission reductions. In addition, we use ‘water-to-add-value’ measures as supplementary proxies for corporate water efficiency. We find that firms with high water efficiency are more likely to disclose water information in the global water survey, which suggests that these firms showcase their good water performance to key stakeholders proactively. Conversely, firms with low water efficiency are less likely to respond to the survey, suggesting that this may be done to maintain an existing corporate image. Our theoretical contribution to accounting literature is the novel integration of self-regulation and self-presentation theory and its application to water disclosure. Our findings suggest that firms disclose water performance data strategically to present a favorable image of corporate water stewardship, providing support for assertive self-presentation behavior.