Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: New insights. (13th February 2018)

• Record Type: Journal Article
• Authors: Hassan, Omaima A.G.; Romilly, Peter
• Is Part Of: Business strategy and the environment. Volume 27:Number 7(2018)
• Page Start: 893
• Page End: 909
• Publication Date: 2018-02-13
• Subjects: disclosure -- economic -- environmental -- environmental policy -- greenhouse gases -- performance; Industrial management -- Environmental aspects -- Periodicals; Industries -- Environmental aspects -- Periodicals; 658.4083
• DOI: 10.1002/bse.2040
• Languages: English
• ISSNs: 0964-4733

Abstract

Abstract: This study examines the associations and causations between corporate economic performance, environmental disclosure and greenhouse gas emissions, utilizing a large, longitudinal, multicountry dataset disaggregated between developed and developing countries. The methodology uses a simultaneous equation model with system estimation to deal with endogeneity between the variables, and Granger causality tests to indicate their direction of causation. A robust result is that lower emissions are strongly associated with better economic performance. After pretesting for stationarity, we find evidence of a one‐way causation from emissions and environmental disclosure to economic performance, but no evidence of reverse causation. We also find strong evidence of a one‐way causation from emissions to disclosure, but no evidence of reverse causation. The overarching policy implication is that environmental performance, as measured by greenhouse gas emissions, plays a crucial role in the formulation of business strategy at the firm level and government environmental policy at national and international levels.