The influence of environmental performance disclosures on firms’ financial

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This study investigated the relationship between environmental performance disclosures by companies and their financial performance, measured as the Return On Assets. The research employed yearly data from 223 different companies over a time span of ten years, ranging from 2007 until 2017. Previous literature indicates that there is a lack of detailed measurement of environmental performance disclosures and that research on this topic is scarce. Therefore, this study employed detailed dimensions of environmental performance disclosures. The results indicated that there is a significant, though small, positive relationship between the disclosure of environmental expenditures and Return On Assets. However, no overall significant results were found for the rest of the dimensions, which were with regard to environmental governance structures, the implementation of environmental management systems, the credibility of the company and the pooled soft environmental performance indicators. Moreover, soft environmental performance disclosures have a stronger effect on Return On Assets than hard environmental performance disclosures, but no concluding remarks could be given as to the direction of these relationship, so whether there is an overall negative or positive influence of the environmental performance disclosures on financial performance. Overall, no overarching one-directional relationship between environmental performance disclosures and financial performance was found.
Faculteit der Managementwetenschappen