http://www.loc.gov/mods/v3 http://www.loc.gov/standards/mods/v3/mods-3-2.xsd
Valuation analysis of mandatory and discretionary environmental disclosures
This study investigates actual environmental performance and
the environmental disclosures made by publicly-traded firms.
One type of disclosure examined is the mandatory disclosure
in which the firm reports liabilities and contingencies
associated with: (1) previously incurred environmental
remediation, and/or (2) compliance with environmental
regulation. The second type of disclosure is the
discretionary disclosure, which typically reports on the
firm's actions taken to reduce environmental degradation by
such measures as minimizing waste, retooling products, and
investing in an environmental management system. A valuation
model is employed to test whether disclosure of internally
and externally generated environmental information is value-
relevant to investors. Three sets of financial and non-
financial information are developed to examine the
association between firm market value and (1) actual
environmental performance, (2) mandatory disclosures, and (3)
discretionary disclosures. The results suggest that,
contrary to previous studies, the number of Superfimd sites
is not considered a significant indicator of future
environmental liabilities. However, the release of toxic
chemicals is perceived as having a negative impact on market
value. Of the mandatory disclosures made by firms, investors
appear to place value on detailed legal proceedings,
qualitative information about future expenditures, current
remediation costs, and projected future capital expenditures.
External validation of environmentally responsible actions
has a positively significant association with market value.
Internally provided voluntary disclosures are not as value-
relevant -- an established audit program a total quality
environmental management system, and consideration of
supplier's environmental standing are all only marginally
significant. - The results of the examination of specific
types of environmental information used by investors should
define and establish the degree and type of disclosures that
firms should make regarding their environmental
responsibilities. In addition, the results may assist firms
by allowing them to focus on the disclosure of more useful
information, and thereby eliminate unnecessary costs.
Issued also on microfiche from University Microfilms Inc.
Includes bibliographical references: pages 122-131.