Le Luo

Corporate Incentives to Disclose Carbon Information: Evidence from the CDP Global 500 Report

We investigate how the Global 500 companies respond to the challenge of climate change with regard to their carbon disclosure strategies. This paper is motivated by a growing body of research that examines the role of large companies in carbon disclosure responsibility and practices. We consider the impact of social, financial market, economic, regulatory, and institutional factors on the motivation to voluntarily participate in the 2009 Carbon Disclosure Project. We find that economic pressure is significantly associated with the decision. That is, companies facing direct economic consequence are more likely to disclose. Companies in greenhouse gas (GHG) intensive sectors show the same tendency. In addition, big companies have a higher propensity for disclosing, suggesting that social pressure plays an important role. We also provide possible explanations as to why a large proportion of our sample firms refuse to disclose. Furthermore, our results suggest that the proxies for information needs of investors are not associated with a higher propensity to disclose the amount of their emission footprints. In sum, it appears that the major driving force for climate change disclosure comes from the general public and government rather than from the other major stakeholders such as shareholders and debtholders. Our results are robust after controlling for other influences.

Carbon tax, corporate carbon profile and financial return

Purpose – This paper aims to investigate the impact of the proposed carbon tax on the financial market return of Australian firms. It also considers the differential tax effect on individual firms with different carbon profiles, including factors such as emissions costs, carbon disclosure and climate-change policies. Design/methodology/approach – Utilising the event-study method, the authors examine the market reaction to seven key carbon legislative information events that occurred from February 2011 to November 2011. The sample includes 48 different firms whose emissions-related data are available from Carbon Disclosure Project reports; thus, 336 firm-event observations are used for the cross-sectional analysis. Findings – The paper documents evidence that the proposed tax has an overall negative impact on shareholder wealth as measured by abnormal returns. The negative impact varies across sectors, with the most significant effect found in the materials, industrial and financial sectors. It was also fo...

Corporate Incentives to Disclose Carbon Information: Evidence from Global 500

We investigate how the Global 500 companies respond to the challenge of climate change with regard to carbon disclosure strategy. This paper is motivated by a growing body of research that examines the role of large companies in carbon disclosure responsibility and practices. Based on the previous research, we consider the impact of economic, regulatory, social and financial market factors on motivation of Global 500 to voluntarily disclose carbon information in Carbon Disclosure Project in 2009. We find that the economic factor is significantly associated with the voluntary carbon disclosure decision. That is, companies that face direct economic consequence are more likely to disclose carbon related information. Companies in carbon intensive sectors show the same tendency. In addition, large companies have more propensity to disclose carbon information, suggesting social or political pressure plays an important role in such a decision. In addition, we provide evidence of why a large proportion of our sample Global 500 firms refuse to disclose carbon information. Our results suggest the information needs of investors for carbon footprints do not appear relevant to the carbon disclosure decision. In sum, the tendency of Global 500 to disclose carbon information is likely explained by economic and social pressure, and the major driving force for climate change disclosure comes from the general public and government, rather than other major stakeholders such as shareholders and debtholders. Our results are robust after controlling other influences.

Corporate ecological transparency: theories and empirical evidence

Purpose - The purpose of this paper is to investigate how firm- and country-level determinants affect corporate ecological transparency. Design/methodology/approach - The study utilizes multiple theories that are commonly used by corporate social responsibility studies to explain the corporate ecological transparency. Based on a sample of 243 Global 500 firms, the authors examine the impact of shareholders’ interest in ecological information, creditors’ concern, firm size, industry membership, the presence of emission trading scheme (ETS), stringency of environmental regulations on corporate ecological transparency. Findings - The paper documents evidence that larger firms, firms in GHG-intensive sectors, and highly leveraged firms tend to produce more ecological disclosures. In addition, ecological transparency is higher in countries with an ETS and increases with more stringent environmental regulation. Finally, the authors find little evidence that shareholders of these firms are concerned with this information. Research limitations/implications - The sample is restricted to the largest firms with relevant carbon profile information. Thus, caution should be exercised when generalizing the inferences. Practical implications - Sustainability has become one of the most importance topics in business agenda. Firms’ attitude and decision about the ecological transparency will affect internal firm performance, external stakeholder engagement, and policy makers’ attention. It determines the firms’ long-term operation and development. Originality/value - The study contributes to the literature by utilizing multiple theories to explain ecological transparency. Each of the theories provided only a partial explanation for ecological transparency. Thus, we need to consider the firms’ behaviors from multiple dimensions. In particular, stakeholder theory and institutional theory are the dominant perspectives accounting for managers’ propensity to disclose a firm’s ecological footprint.