Edited by Subhash C. Jain and Ben L. Kedia
Chapter 7: Driving to Distraction or Disclosure? Shareholder Activism, Institutional Investors and Firms’ Environmental Transparency
R. Scott Marshall, Darrell Brown and Marlene Plumlee Recent actions by a variety of constituencies suggest an increased interest in the voluntary disclosure of environmental information by publicly traded firms. In the US a congressional hearing addressed issues of corporate disclosure of environmental information (CSWG, 2004), while the SEC assigned the Government Accounting Office to report on environmental disclosures within corporate reports (GAO, 2004). The Netherlands, Finland, Spain and Japan currently require corporate reporting of environmental data by certain publicly listed companies (KPMG, 2005; Llena, Moneva and Hernandez, 2006); other countries are contemplating following suit (Kolk, 2008). These developments are consistent with an increased role for environmental information about corporate operations to investment and managerial decision-makers. However, aside from required disclosures related to contingent environmental liabilities and toxic waste emissions, disclosure of environmentalrelated information remains largely unregulated in the US. Ultimately the decision to disclose environmental information and the quality of those disclosures is managerial-based as influenced by the board of directors and shareholders (Millstein, 1991). While many suggest that corporate governance defined as the rules and practices that govern the relationship between managers, boards and shareholders (Jensen and Meckling, 1976), guides the extent and method of information disclosures made by companies, evidence of this relation is limited. In this study we build from the increased emphasis on environmental disclosures and the expressed importance of good corporate governance in determining the extent of information disclosure in general to explore this relation. Specifically, we examine the association between 153 M2488 -...
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