Does environmental reporting reflect environmental performance?: Evidence from China. (2014)

• Record Type: Journal Article
• Other Names: Special Editor.
• Is Part Of: Pacific accounting review. Volume 26(2014)Supplement
• Page Start: 134
• Page End: 154
• Publication Date: 2014
• Subjects: Legitimacy -- Disclosure index -- Environmental performance -- Environmental reporting -- Voluntary disclosure theory; Accounting -- Pacific Area -- Periodicals; Accounting -- Periodicals; 657
• DOI: 10.1108/PAR-07-2013-0073
• Languages: English
• ISSNs: 0114-0582

Abstract

Abstract : Purpose – The purpose of this study is to evaluate the environmental disclosure practices of firms engaged in environmentally sensitive industries by examining their association with environmental performance.Design/methodology/approach – The study tests for associations between environmental performance and the level and nature of environmental disclosures by listed Chinese firms operating in industries that have been identified by a regulator as environmentally sensitive. The level of environmental disclosure is measured using a disclosure index based on the global reporting initiative. The nature of environmental disclosure is measured as the ratio of hard to total disclosure items.Findings – Firms with more favourable environmental performance provide a higher level of environmental disclosure and include a greater proportion of hard disclosure items. However, the overall level of disclosure is lower than that observed in developed countries.Research limitations/implications – Due to data constraints, the proxy for environmental performance is based on the receipt and maintenance of environmental titles and awards and does not capture variation in the level of environmental performance of firms with no titles or awards.Practical implications – As China continues to embrace market‐based economic reform, the ability to reflect sustainable choices through market transactions is of increasing importance to the preservation of economic, natural and social capital for future generations.Originality/value – The study examines the relation between environmental reporting and environmental performance by firms operating in industries that have been identified by a regulator as environmentally sensitive. Acknowledgements : The authors would like to thank Dr Chris Graves, Dr Tony McMurtrie, two anonymous reviewers, the guest editors, Professor Charl de Villiers and Professor Chris van Staden, and seminar participants at Deakin University for their helpful comments on earlier versions of this paper. Views expressed in this article are those of the authors.