Do Social and Environmental Disclosures Increase Firm Value ? Evidence from Indian Companies
DOI:
https://doi.org/10.17010/ijf/2017/v11i4/112628Keywords:
Sustainability Reporting
, Business Responsibility Reporting, Social and Environmental Disclosures, BSE 100 Index, Tobin Q, Panel Data RegressionG30
, M1, M41Paper Submission Date
, August 3, 2016, Paper sent back for Revision, January 24, 2017, Paper Acceptance Date, March 19, 2017.Abstract
There is a clear shift in the way the companies report their performance through the communications with their stakeholders. Moving from mere profit, the companies are increasingly showing their non-financial performance in terms of sustainability and social responsibility. Companies not only want to just spend on sustainability, but also like to project their activities to gain image among the stakeholders ; more often with a separate set of report called corporate sustainability report, which is based on the triple bottom-line (profit, people, and planet). This study focused on understanding the corporate social and environmental reporting trends of Indian non-financial companies and the impact on market valuation. The sample constituted of companies in the BSE-100 index and data for 5 financial years - from FY2010 to FY2014 - were used. This period was chosen as it witnessed several regulatory changes in the triple bottom line reporting in the form of new Companies Act, 2013 and Clause 55 of the listing agreement. Paired 't' test and panel data regression model were used for analyzing the data. This study found that the level of social and environmental disclosures has significantly improved post business responsibility reporting and positively significantly influenced market valuation.Downloads
Downloads
Published
How to Cite
Issue
Section
References
Akhtaruddin, M. (2005). Corporate mandatory disclosure practices in Bangladesh. International Journal of Accounting, 41(1), 399 - 422. DOI: 10.1016/j.intacc.2005.09.007
Balasubramanian, N., Kimber, D., & Siemensma, F. (2005). Emerging opportunities or traditions reinforced? An analysis of the attitude towards CSR in India. The Journal of Corporate Citizenship, 17 (Spring), 79 - 93.
Bammi, R. (2013). An empirical analysis of environmental and financial performance of BSE 100 companies. Indian Journal of Finance, 7 (6), 16-30.
Baxi, C., & Ray, R. S. (2009). Corporate social and environmental disclosures and reporting. Indian Journal of Industrial Relations, 44 (3), 355-375.
Berry, M., & Rondinelli, D. A. (1998). Proactive corporate environmental management; A new industrial revolution. Academy of Management Executive, 12 (2), 1-13.
Berthelot, S., Colulmont, M., & Serret, V. (2012). Do investors value sustainability reports? A Canadian study. Corporate Social Responsibility and Environmental Management, 19 (6), 355-363.
Bracker, K., & Ramaya, K. (2011). Examining the impact of research and development expenditures on Tobin's Q. Academy of Strategic Management Journal, 10 (Special), 63-79.
Campbell, D., Craven, B., & Shrives, P. (2003). Voluntary social reporting in three FTSE sectors : A comment on perception and legitmacy. Accounting, Auditing and Accountability Journal, 16(4), 558-581. DOI: http://dx.doi.org/10.1108/09513570310492308
Chiong, P. T. (2010). An examination of corporate sustainability disclosue level and its impact of financial performance. Malaysia: Multimedia University.
Clarkson, M. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 20 (1), 92-117.
Cormier, D., Aerts, W., Ledoux, M. - J., & Magnan, M. (2009). Attributes of social and human capital disclosure and information asymmetry between managers and investors. Canadian Journal of Administrative Sciences, 26 (1), 71-88.
Craig, D. (2006). Legitmacy theory. In Z. Hoque (ed.), Methodological issues in accounting research (pp. 161-181). London : Spiramus Press Limited.
Dawkins, C., & Ngunjiri, F. W. (2008). Corporate social responsibility reporting in South Africa. Journal of Business Communication, 45 (3), 286-307.
Elijido-Ten, E. (2007). Applying stakeholder theory to analyse corporate environmental performance. Asian Review of Accounting, 15 (2), 164 - 184.
Eljayash, K. M., James, K., & Kong, E. (2012). The quantity and quality of environmental disclosure in annual report of national oil and gas companies in Middle East and North Africa. International Journal of Economics and Finance, 4 (10), 201-217.
Elkington, J. (1997). Cannibals with forks: The triple bottomline of 21st century business. Cambridge, UK: Capstone Publishers.
Faisal, F., Tower, G., & Rusmin, R. (2012). Legitimising corporate sustainability reporting throughout the world. Australasian Accounting Business & Finance Journal, 6 (2), 19-34.
Freeman, R. E., & Reed, D. L. (1983). Stockholders and stakeholders: A new perspective on corporate governance. California Management Review, 25 (3), 88-106. DOI:10.2307/41165018
Gelb, D. S., & Stawser, J. A. (2001). Corporate social responsibility and financial disclosures : An alternative explanation for increased disclosure. Journal of Business Ethics, 33 (1), 1-13.doi: 10.1023/A:1011941212444
Ghazali, N., & Weetman, P. (2006). Perpetuating traditional influences: Voluntary disclosure in Malaysia. Journal of International Accounting, Auditing and Taxation, 15 (2), 226 - 248.
Global Reporting Initiative. (2013). Reporting principles and standard disclosures. Amsterdam: Global Reporting Initiative. Retrieved from https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosures.pdf
Henning, L. H., Lewis, B., & Shaw, W. H. (2000). Valuation of the components of purchased goodwill. Journal of Accounting Research, 38 (2), 375-386.
Huang, J., Xu, S., & Liu, D. (2014). Market response to social and environmental disclosure in China. Advances in Information Sciences and Service Sciences, 6 (1), 54 - 61.
Kamat, M., & Kamat, M. (2015). An evaluation of the perceptions in carbon accounting and reporting in India. Journal of Arts,Science and Commerce, VI (2), 1-14.
Kansal, M., Joshi, M., & Batra, G. S. (2014). Determinants of corporate social responsibility disclosures: Evidence from India. Advances in Accounting, 30 (1), 217-229.
Karim, N. K., & Mukhtaruddin, M. (2013). The quality of voluntary corporate social responsibility disclosure effect on the firm . 3rd Annual International conference on Accounting and Finance (pp. 37-47). Global Science and Technology Forum.
KPMG. (2013). The KPMG survey of corporate responsibility reporting. Switzerland: KPMG International.
Li, S., Fetscherin, M., Alon, I., Lattemann, C., & Yeh, K. (2010). Corporate social responsibility in emerging markets : The importance of governance environment. Management International Review, 50 (5), 635-654.
Marshall, S., & Brown, D., & Plumee, M. (2008). The impact of voluntary environmental disclosure quality on firm value (pp. 1-6). Academy of Management Proceedings. doi:10.5465/AMBPP.2009.44264648
Marston, C., & Polei, A. (2004). Corporate reporting on the internet by German companies. International Journal of Accounting Information Systems, 5 (3), 285-311.
Meng, X. H., Zeng, S. X., & Tam, C. M. (2013). From voluntarism to regulation: A study of ownership economic performance and corporate environmental information disclosure in China. Journal of Business Ethics, 116 (1), 217-232. doi: 10.1007/s10551-012-1462-8
Mitra, P., Agarwal, V., & Ghosh, A. (2015). Exploring factors for effective sustainability reporting : A survey of Indian chemical industry. Asian Social Science, 11 (3), 197-211. doi: 10.5539/ass.v11n3p197
O'Dwyer, B. (2003). The ponderous evolution of corporate environmental reporting in Ireland. Recent evidence from publicly listed companies. Corporate Social Responsibility and Environmental Management, 10 (1), 91-100.
Owusu-Ansah, S., & Yeoh, J. (2005). The effect of legislation on corporate disclosures practices. Abacus, 41 (1), 92-109.
Plumlee, M., Brown, D., Hayes, R. M., & Marshall, R. S. (2015). Voluntary environmental disclosure quality and firm value: Further evidence. Journal of Accounting and Public Policy, 34 (4), 336 - 361.
Popa, A., Blidisel, R., & Bogdan, V. (2009). Transparency and disclosure between theory and practice. A case study of Romania. Budapest Tech Keleti Károly Faculty of Economics (pp. 173-184). Budapest: Budapest Tech Keleti Károly Faculty of Economics.
Qu, W., Leung, P., & Cooper, B. (2013). A study of voluntary disclosure of listed Chinese firms-a stakeholder perspective. Managerial Auditing Journal, 28 (3), 261-294. doi: 10.1108/02686901311304376
Ragothaman, S., & David, C. (2008). The impact of environmental information disclosures on shareholders returns in a company : An empirical study. International Journal of Management, 25 (4), 613-620.
Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50 (1), 1421-1460.
Reverte, C. (2016). Corporate social responsibility disclosure and market valuation: Evidence from Spanish listed firms. Review of Managerial Science, 10 (2), 411- 435. doi:doi:10.1007/s11846-014-0151-7
Roberts, R. (1992). Determinants of corporate social responsibility disclosure : An application of stakeholders theory. Accounting ,Organisations & Society, 17 (6), 595-612.
Sadri, J., & Sharma, R. (2015). Showing the mirror to Indian business and actualizing CSR Initiatives. Asia Pacific Journal of Management & Entrepreneurship Research, 4 (1), 36-62.
Salomone, R., & Galluccio, G. (2001). Environmental issues and financial reporting trends- A survey in chemical and oil & gas companies. DOI : http://dx.doi.org/10.2139/ssrn.278240
Sami, H., & Zhou, H. (2008). The Economic consequences of increased disclosure: Evidence from cross-Listings of Chinese firms. Journal of International Financial Management & Accounting, 19 (1), 1-27. doi:10.1111/j.1467-646X.2008.01014.x
Shanmugam, K. (2013). Environment CSR initiatives of manufacturing units in India- An empirical study. African Journal of Business Management, 7 (16), 1560-1570.doi:10.5897/AJBM2013.6881
Sharma, S. (2011). Corporate social responsibility in India. Indian Journal of Industrial Relations, 46 (4), 637-649.
Srinivasan, V. (2011). Business ethics in the South and Southeast Asia. Journal of Business Ethics, 104 (1), 73-81.doi: 10.1007/s10551-012-1264-z
Stock, H. J., & Watson, M. (2007). Introduction to econometrics. Boston: Pearson Addison Wesley.
Suttipun, M., & Stanton, P. (2012). Determinants of environmental disclosure in Thai corporate annual reports. International Journal of Accounting and Financial Reporting, 2 (1), 99-115.
Varghese, R. (2012). Voluntary corporate disclosures by Indian companies. Indian Journal of Finance, 6 (7), 4 -12.
Verbeeten, F. H. M., Gamerschlag, R., & Möller, K. (2016). Are CSR disclosures relevant for investors? empirical evidence from Germany. Management Decision, 54 (6), 1359-1382.
Weber, M. (1968). On charisma and institution building. Chicago: The University of Chicago Press.
Yi, A., Davey, H., & Eggleton. (2011). Towards a comprehensive theoretical framework for voluntary IC disclosures. Journal of Intellectual Capital, 12 (4), 571-585.doi: 10.1108/14691931111181733
