Time-series cross-sectional environmental performance and disclosure relationship: specific evidence from a less-developed country

 
 
 
  • Abstract
  • Keywords
  • References
  • PDF
  • Abstract


    This paper relies on vulnerability and exploitability framework to submit new insights into legitimacy theory and voluntary disclosure theory using specific empirical evidence from the Nigerian oil and gas industry. The study connects the voluntary and legitimizing disclosure behaviors, regarding carbon emission due to gas flaring, of dominant companies in the Nigerian upstream petroleum sector to the vulnerability and exploitability of Nigeria as a less developed country. The hypothesized relations between gas flaring-related environmental performance and two forms of its disclosure (volume and substance) are estimated and tested using Prais-Winsten regression with Panel Corrected Standard Errors (PCSE). While the paper uses Data Envelopment Analysis (DEA) to measure gas flaring-related carbon performance, the two forms of gas flaring-related disclosures are measured using content analysis. We document significant positive and negative association between gas flaring-related carbon emission performance, on one hand, and the volumetric disclosure and disclosure substance on the other hand. These results imply that while the positive relation confirms the vulnerable nature of Nigeria as a less developed country, the negative relation is linked to the countrys exploitability. It is also empirically established that environmental performance is one of the key factors responsible for the undulating trend in the volume of environmental disclosures by large corporations operating in less-developed countries

    Keywords: Carbon Emission, Environmental Performance, Environmental Disclosure, Exploitability, Gas Flaring, Vulnerability.


  • References


    1. Abbott, W. F., & Monsen, R. G. (1979) On the measurement of corporate social responsibility: Self-reported disclosure as a method of measuring corporate social involvement. Academy of Management Journal, 22(3), 501-515.
    2. Ahmad, N. S. (2004) Corportae environmental disclosure in Libya: Evidence and environmental deterministic theory. [Ph.D. Thesis]: Napier University, United Kingdom.
    3. Ahmad, Z., Hassan, S., & Mohammad, J. (2003) Determinants of environmental reporting in Malaysia. International Journal of Business Studies, 11(1), 69-90.
    4. Al-Tuwaijri, S. A., Christensen, T. E., & Hughes II, K. E. (2004) The relations among environmental disclosure, environmental performance, and economic performance: A simultaneous equations approach. Accounting Organization and Society, 29, 447471.
    5. Ann, E. G., Zailani, S., & Wahid, N. A. (2006) A study on the impact of Environmental Mangement System (EMS) towards firms' performance in Malaysia. Management of Environmental Quality: An International Journal, 17, 73-93.
    6. Arrow, K., Bolin, B., Costanza, R., Dasgupta, B., Folke, C., Hollin, C. S., et al. (1995) Economic growth, carrying capacity, and the environment. Ecological Economics, 15(2), 91-95.
    7. Ascui, F., & Lovell, H. (2011) As frames collide: Making sense of carbon accounting. Accounting, Auditing & Accountability Journal, 24(8), 978-999.
    8. Ascui, F., & Lovell, H. (2012) Carbon accounting and the construction of competence. Journal of Cleaner Production, 36, 48-59.
    9. Beck, A. C., Campbell, D., & Shrives, P. J. (2010) Content analysis in environmental reporting research: Enrichment and rehearsal of the method in a British-German context. The British Accounting Reviews, 42, 207-222.
    10. Beck, N. (2001) Time-seriescross-section data: What have we learned in the past few years? Annual Review of Political Science, 4, 271-29.
    11. Beck, N., & Katz, J. N. (1995) What to do (and not to do) with Time-seriescross-section data in comparative politics. The American Political Science Review, 89(3), 634-647.
    12. Beck, N., & Katz, J. N. (1996) Nuisance v. substance: Specifying and estimating time-series cross-section models. Political Analysis, 6(1), 1-36.
    13. Beck, N., & Katz, J. N. (2007) Random coefficient models for time-seriescross-section data: Monte Carlo experiments. Political Analysis, 15(2), 182195.
    14. Belal, A. R., Cooper, S. M., & Robin, W. R. (2013) Vulnerable and exploitable: The need for organizational accountability and transparency in emerging and less developed countries. Accounting Forum, 37(2), 81-91.
    15. Berry, M. A., & Rondinelli, D. A. (1998) Proactive corporate environmental management: A new industrial revolution. Academy of Management Journal, 12(2), 38-50.
    16. Bewley, K., & Li, Y. (2000) The disclosure of environmental liabilities by Canadian manufacturing companies: A voluntary disclosure perspective. Advances in Environmental Accounting and Management, 1, 201-226.
    17. Blaikie, P., Cannon,, T., Davis, I., & Wisner, B. (1994) At risk: Natural hazards, peoples vulnerability and disasters. London: Routledge.
    18. Campbell, D. (2000) Legitimacy theory or managerial reality construction: Corporate social disclosure in Mark Spencer corporate reports 1969-1997. Accounting Forum, 24(1), 80-100.
    19. Campbell, D. (2004) A longitudinal and cross-sectional analysis of environmental disclosure in UK companiesA research note. The British Accounting Review, 36, 107-117.
    20. Campbell, D. J. (2003) Intra- and inter-sectoral effects in environmental disclosures: Evidence for legitimacy theory? Business Strategy and the Environment, 12(6), 357-371.
    21. Caves, D. W., Christensen, L. R., & Diewert, E. W. (1982) Multilateral comparison of output, input and productivity using superlative index number. Economic Journal, 92(365), 73-86.
    22. Cho, C. H., Patten, D. M., & Roberts, R. W. (2006) Corporate political strategy: An examination of the relation between political expenditures, environmental performance, and environmental disclosure. Journal of Business Ethics, 67(2), 139-154.
    23. Cho, C. H., Roberts, R. W., & Patten, D. M. (2010) The language of US corporate environmental disclosure. Accounting Organisation and Society, 35(4), 431-443.
    24. Cho, H. C., & Patten, D. (2007) The role of environmental disclosures as tools of legitimacy: A Research note. Accounting Organizations and Society, 32(7-8), 639-647.
    25. Choi, J.?S. (1998) An evaluation of the voluntary corporate environmental disclosures: A Korean evidence. Social and Environmental Accountability, 18(1), 2-8.
    26. Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008) Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting Organisation and Society, 33(4-5), 303-327.
    27. Clarkson, P. M., Overell, M. B., & Chapple, L. (2011) Environmental reporting and its relation to environmental performance. ABACUS A Journal of Accounting, Finance and Business Studies, 27(1), 47-60.
    28. Cooper, W. W., Seiford, L. M. & Tone, K. (2007) Data envelopment analysis: A comprehensive text with models, applications, references and DEA-solver software. New York: Springer.
    29. Cormier, D., & Magnan, M. (1997) Investors' assessment of implicit environmental liabilities: An empirical investigation. Journal of Accounting and Public Policy, 16(2), 215-241.
    30. Cuesta, R. A., Lovell, C. K., & Zofio, J. L. (2009) Environmental efficiency measurement with trans-log distance functions: A parametric approach. Ecological Economics, 68, 2232-2242.
    31. Dawkins, C. E., & Fraas, J. W. (2011a) Erratum to: Beyond acclamations and excuses: environmental performance, voluntary environmental disclosure and the role of visibility. Journal of Business Ethics, 97(1), 244-282.
    32. Dawkins, C. E., & Fraas, J. W. (2011b) Coming clean: The impact of environmental performance and visibility on corporate climate-change disclosure. Journal of Business Ethics, 100, 303-322.
    33. de Villiers, C., & van Staden, C. J. (2006) Can less environmental disclosure have a legitimizing effect? Evidence from Africa. Accounting Organisation and Society, 31(8), 763-781.
    34. de Villiers, C., & van Staden, C. J. (2011) Where firms choose to disclose voluntary environmental information. Journal of Accounting and Public Policy, 30(6), 504525.
    35. Deegan, C., & Gordon, B. (1996) A study of environmental disclosure practices of Australian corporations. Accounting and Business Research, 26(3), 187-199.
    36. Deegan, C., & Rankin, M. (1996) Do Australian companies report environmental news objectively? An analysis of environmental disclosures by firms prosecuted successfully by environmental protection authority. Accounting, Auditing & Accoutability Journal, 9(2), 50-67.
    37. Desjardins, J. R. (2001) Environmental Ethics: An introduction to environmental philosophy (3rd ed.) Belmont: Wadswoth/Thomson Learning.
    38. Disu, A., & Gray, R. (1998) An exploration of social reporting and MNCs in Nigeria. Social and Environmental Accountability Journal, 18(2), 13-15.
    39. Dowling, J., & Pfeffer, J. (1975) Organizational legitimacy: Social values and organizational behavior. The Pacific Sociological Review, 18(1), 122-136.
    40. Dye, R. A. (1985) Disclosure of nonproprietary information. Journal of Accounting Research, 23(1), 123-145.
    41. Elijido-Ten, E. (2011) Media coverage and voluntary environmental disclosures: A developing country exploratory experiment. Accounting Forum, 35(3), 139157.
    42. Fre, R., Grosskopf, S., & Hernandez-Sancho, F. (2004) Environmental performance: An index number approach. Resource and Energy Economics, 26(4), 343-352.
    43. Fre, R., Grosskopf, S., & Pasurka Jr., C. A. (2006) Social Responsibility: U.S. power plants: 1985-1998. J Prod Anal, 26(3), 259-267.
    44. Fre, R., Grosskopf, S., & Tyteca, D. (1996) Activity analysis model of the environmental performance of firms. Application to fossil-fuel-fired electric utilities. Ecological Economics, 18(2), 161-175.
    45. Fre, R., Grosskopf, S., & Whittaker, G. (2004) Distance functions with applications to DEA. In W. W. Cooper, L. M. Seiford, J. Zhu, W. W. Cooper, L. M. Seiford, & J. Zhu (Eds.), Handbook on Data Envelopment Analysis (pp. 139-52) Boston: Kluwer Academic Publishers.
    46. Fre, R., Grosskopf, S., Lovell, C. A., & Pasurka, C. (1989) Multilateral productivity comparison when some output are undesirable: A nonparametric approach. The Review of Economics and Statistics, 71(1), 90-98.
    47. Fre, R., Grosskopf, S., Lovell, C. A., & Yaisawarng, S. (1993) Derivation of shadow price for undesirable output: A nonparametric approach. Review of Economics and Statistics, 75(2), 374-380.
    48. Fre, R., Grosskopf, S., Noh, D.-W., & William, W. (2005) Characteristics of a polluting technology: Theory and practice. Journal of Econometrics, 126(2), 469-492.
    49. Farrell, M. J., 1957. Measurement of productive efficiency. Journal of the Royal Statistical Society, 120(3), pp. 253-290.
    50. Freedman, M., & Jaggi, B. (1982) Pollution disclosures, pollution performance and economic performance. Omega: The International Journal of Management Science, 10(2), 167-176.
    51. Freedman, M., & Jaggi, B. (2005) Global warming, commitment to the Kyoto Protocol, and accounting disclosure by the largest global public firms from polluting industries. The International Journal of Accounting, 40(3), 215-232.
    52. Freedman, M., & Wasley, C. (1990) The association between environmental performance and environmental disclosure in annual reports and 10Ks. Advances in Public Interest Accounting, 3, 183-193.
    53. Gimenez, G. L., Casadesus, M. F., & Valls, J. P. (2003) Using environmental management system to increase firms' competitiveness. Corporate Social Resposnibility and Environmental Management, 10, 101-110.
    54. Gray, R., Kouhy, R. & Lavers, S., 1995. Corporate social and environmental reporting: a review of literature and longitudinal study of UK disclosure. Accounting, Auditing and Accountability Journal, 8(2), pp. 47-77.
    55. Green, D. P., Kim, S. Y. & Yoon, D. H. (2001) Dirty pool. International Organisation, 55(2), 441 468.
    56. Griffin, J. J., & Mahon, J. F. (1997) The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research. Business & Society, 36(1), 5-31.
    57. Guthrie, J., & Parker, L. D. (1990) Corporate social disclosure practice: A comparative international analysis. Advances in Public Interest Accounting, 3, 159-75.
    58. Hines, R. D., (1988) Financial accounting: in communicating reality, we construct reality. Accounting Organisation and Sciety, 13(3), pp. 251-261.
    59. Holsti, O. (1969) Content analysis for the social sciences and humanities. Massachusetts: Addison-Wsley Publishing Company.
    60. Horvthov, E. (2010) Does environmental performance affect financial performance? A meta-analysis. Ecological Economics, 70(1), 5259.
    61. Hua, Z., & Bian, Y. (2007) DEA with undesirable factors. In J. Zhu, W. D. Cook, J. Zhu, & W. D. Cook (Eds.), Modelling data irregularities and structural complexities in data envelopment analysis (pp. 03-121) New York: Springer Science+Business Media.
    62. Hughes, S. B., Anderson, A., & Golden, S. (2001) Corporate environmental disclosures: Are they useful in determining environmental performance? Journal of Accounting and Public Policy, 20(3), 217-240.
    63. Ilinitch, A. Y., Soderstrom, N. S., & Thomas, T. E. (1998) Measuring corporate environmental performance. Journal of Accounting and Public Policy, 17(4-5), 383-408.
    64. Ingram, R. W., & Frazier, K. B. (1980) Environmental performance and corporate disclosure. Journal of Accounting Research, 18(2), 614-622.
    65. Iraldo, F., Testa, F., & Frey, M. (2009) Is an environmental management system able to influence environmental and competitive performance? The case of the eco-management and audit scheme (EMAS) in the European Union. Journal of Cleaner Production, 17(16), 1444-1452.
    66. Jamil, C. M., Alwi, K., & Mohamed, R. (2002) Corporate social responsibility disclosure in the annual reports of Malaysian companies: A longitudinal study. Social and Environmental Accountability Journal, 22(2), 5-9.
    67. Johnstone, N., & Labonne, J. (2009) Why do manufacturing facilities introduce environmental management systems? Improving and/or signaling performance. Ecological Economics, 68(3), 719-730.
    68. Konar, S., & Cohen, M. (2001) Does the market value environmental performance? Review of Economics and Statistics, 83(2), 281-309.
    69. KPMG. (2008) KPMG International survey of corporate responsibility reporting 2008. USA: KPMG International.
    70. Krippendorff, K. (2004) Content analysis: An introduction to its methodology (Second ed.) Thousand Oaks: Sage Publications.
    71. Li, Y., Richardson, G. D., & Thornton, D. B. (1997) Corporate disclosure of environmental liability information: Theory and Evidence. Contemporary Accounting Research, 14(3), 435-474.
    72. Lindblom, C. K. (1994) The implications of organizational legitimacy for corporate social performance and disclosure. New York: paper presented at Critical Perspectives on Accounting Conference.
    73. Lpez-Gamero, M. D., Molina-Azorn, J. F., & Clever-Cots, E. (2009) The whole relationship between environmental variables and firm performance: Competitive advantage and firm resources as mediator variables. Journal of Environmental Management, 90(10), 3110-3121.
    74. Mahadeo, J. D., Oogarah-Hanuman, V., & Soobaroyen, T. (2011) Changes in social and environmental reporting practices in an emerging economy (20042007): Exploring the relevance of stakeholder and legitimacy theories. Accounting Forum, 35(3), 158-175.
    75. Mathews, M. R. (1993) Social responsibility accounting. London: Chapman and Hall.
    76. Montalbano, P. (2011) Trade openness and developing countries vulnerability: Concepts, misconceptions, and directions for research. World Development, 39(9), 14891502.
    77. Nawrocka, D., & Parker, T. (2009) Finding the connection: environmental management systems and environmental performance. Journal of Cleaner Production, 17(6), 601-607.
    78. O'Donovan, G. (2002) Environmental disclosures in the annual report: Extending the applicability and predictive power of legitimacy theory. Accounting, Auditing and Accouniability Journal, 15(3), 344-371. Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003) Corporate social and financial performance: A meta-analysis. Organisation Studies, 23(3), 404-441.
    79. Parker, L. D. (2005) Social and environmental accountability research: A view from the commentary box. Accounting, Auditing & Accountability Journal, 18(6), 842-860.
    80. Patten, D. M. (1992) Intra-industry environmental disclosures in response to the Alaskan oil spill: A note on legitimacy theory. Accounting Organizations and Society, 17(5), 471-475.
    81. Patten, D. M. (2002) The relation between environmental performance and environmental disclosure: A research note. Accounting, Organizations and Society, 27(8), 763-773.
    82. Perotto, E., Canziani, R., Marchesi, R., & Butelli, P. (2008) Environmental performance, indicators and measurement uncertainty in EMS context: A case study. Journal of Cleaner Production, 16(4), 517-530.
    83. Pittman, R. W. (1983) Multilateral productivity comparisons with undesirable outputs. Economic Journal, 93(372), 883-891.
    84. Plmper, T., & Troeger, V. E. (2005) Panel data analysis in comparative politics: Linking method to theory. European Journal of Political Research, 44(2), 327354.
    85. Podest, F. (2006) Comparing time-series cross-section model specifications: The case of welfare state development. Quality & Quantity, 40(4), 539559.
    86. Rahman, S. A., Yusoff, R. b., & Mohamed, W.-N. b. (2009) Environmental disclosure and financial performance: An empirical study of Malaysia, Thailand and Singapore. Social and Environmental Accountability Journal, 29(2), 46-58.
    87. Scipioni, A., Manzardo, A., Mazzi, A., & Mastrobuono, M. (2012) Monitoring the carbon footprint of products: A methodological proposal. Journal of Cleaner Production, 36, 94-101.
    88. Seiford, L. M., & Zhu, J. (2002) Modeling undesirable factors in efficiency evaluation. European Journal of Operational Research, 142(1), 1620.
    89. Shephard, R. W. (1970) Theory of cost and production functions. Princeton, NJ: Princeton University Press.
    90. Siddiqui, J. (2001) Environmental non?accountability in Bangladesh?: The striking case of the magurchara gas field disaster. Social and Environmental Accountability Journal, 21(2), 12-13.
    91. Smith, M. (2003) Research Methods in Accounting. London: Sage .
    92. Stechemesser, K., & Guenther, E. (2012) Carbon accounting: a systematic literature review. Journal of Cleaner Production, 36, 17-38.
    93. Sulaiman, M., & Ahmad, N. (2002) ISO 14001 and corporate performance: A survey of certified companies in Malaysia. Retrieved August 13, 2010, from Environmental Expert: www.environmentalexpert.com
    94. Sullivan, R., & Gouldson, A. (2012) Does voluntary carbon reporting meet investors needs? Journal of Cleaner Production, 36, 60-67.
    95. Sumiani, Y., Haslinda, Y., & Lehman, G. (2007) Environmental reporting in a developing country: A case study on status and implementation in Malaysia. Journal of Cleaner Production, 15(10), 895-901. Tsai, W.-H., Shen, Y.-S., Lee, P.-L., Chen, H.-C., Kuo, L., & Huang, C.-C. (2012) Integrating information about the cost of carbon through activity-based costing. Journal of Cleaner Production, 36, 102-111.
    96. Tsang, E. W. (1998) A longitudinal study of corporate social reporting in Singapore: The case of the banking, food and beverages and hotel industries. Accounting Auditing and Accountability Journal, 11(15), 624-635.
    97. Tyteca, D. (1996) On the measurement of the environmental performance of firms- A literature review and a productive efficiency perspective. Journal of Environmental Management, 46(3), 281-308.
    98. Tyteca, D. (1997) Linear programming models for the measurement of environmental performance of firms-concepts and empirical results. Journal of Productivity Analysis, 8(2), 183-197.
    99. van Staden, C. J., & Hooks, J. (2007) A Comprehensive comparison of corporate environmental reporting and responsiveness. The British Accounting Review, 39, 197210.
    100. Verrecchia, R. E. (1983) Discretionary disclosure. Journal of Accounting and Economics, 5, 79194.
    101. Waddock, S. A., & Graves, S. B. (1997) The corporate social performance-financial performance link. Strategic Management Journal, 18(4), 303-319.
    102. Wiseman, J. (1982) An evaluation of environmental disclosures made in corporate annual reports. Accounting Organization and Society, 7(1), 53-63.
    103. Wood, D. J. (1991) Corporate social performance revisited. The Academy of Management Review, 16(4), 691-718.
    104. Wooldridge, J. M. (2002) Introductory econometrics: A modern approach (Second ed.) US: South Western Educational Publishing.
    105. Zaim, O. (2004) Measuring environmental performance of state manufacturing through changes in pollution intensities: A DEA framework. Ecological Economics, 48(1), 37-47.
    106. Zeghal, D., & Ahmed, S. A. (1990) Comparison of social resposibility information disclosure media used by Canadian firms. Accounting Auditing and Accountability Journal, 3(1), 38-53.
    107. Zhou, P., Ang, B. W., & Han, J. Y. (2009) Total factor carbon emission performance: A Malmquist index analysis. Energy Economics, 32(1), 194-201 .
    108. Zhou, P., Ang, B., & Poh, K. (2006) Slacks-based efficiency measures for modeling environmental performance. Ecological Economics, 60(1), 111-118.

 

View

Download

Article ID: 2748
 
DOI: 10.14419/ijaes.v2i2.2748




Copyright © 2012-2015 Science Publishing Corporation Inc. All rights reserved.