Is corporate environmental disclosure associated with firm value? A multi-country study of Gulf Cooperation Council firms

Date

2020-07-28

Advisors

Journal Title

Journal ISSN

ISSN

1099-0836

Volume Title

Publisher

Wiley

Type

Article

Peer reviewed

Yes

Abstract

Several studies have found a relationship between corporate social and environmental disclosure and firm value or accounting profitability. Where environmental disclosure has been the focus, though, only single-country studies have been published; and most of the previous research concerns the developed world. This study examines the association between corporate environmental disclosure (CED) and firm value (FV) in the Gulf Cooperation Council (GCC) countries, where CED has been increasing from its previous low base. Findings from a multi-country sample of 500 firm-year observations using a 55-item unweighted environmental disclosure index suggest that CED is significantly and positively related to FV as measured by Tobin’s Q (TBQ). The relationship is robust to using a weighted version of the disclosure index, individual countries and environmental disclosure sub-indices. Some evidence of a positive relationship between CED and return on assets (ROA) is also found, but even where statistically significant, the relationship is much weaker than in the case of TBQ. For empirical and theoretical reasons, we recommend that future studies pay greater attention to market-based proxies, if possible when investigating the value relevance of CED in both developed and developing countries. Our results suggest that both managers and policymakers in GCC countries should take a positive view of expanded CED.

Description

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
open access article

Keywords

Corporate environmental disclosure, Firm value, Neo-institutional theory, Gulf Cooperation Council

Citation

Gerged, A. M., Beddewela, E. S., and Cowton, C. J. (2020) Is corporate environmental disclosure associated with firm value? A multi-country study of Gulf Cooperation Council firms. Business Strategy and the Environment

Rights

Research Institute

Centre for Research in Accountability, Governance and Sustainability (CRAGS)