Environmental Audit and Environmental Disclosure Quality

Authors

  • Moalla Marwa
  • Bassem Salhi
  • Anis Jarboui

DOI:

https://doi.org/10.47743/saeb-2020-0007

Keywords:

environmental audit, voluntary disclosure, timely disclosure, environmental information

Abstract

In this study we explore the association between environmental audit and the quality of environmental disclosure as measured by voluntary and timely disclosure. Relying on a multiple theory framework and using a sample of 81 French non-financial companies listed on the SBF 120 index covering the six-year period from 2012 to 2017, we found a positive and statistically significant relationship between the level of voluntary disclosure of environmental information and the environmental audit committee, the environmental auditor's BIG 4, debt levels, firm size, earnings management, and the industry. In addition, findings indicate that the environmental audit committee, CSR committee, the environmental auditor's BIG 4, earnings management, firm size, and the industry have an impact on the timely disclosure of environmental information. However, the regression of the results showed that there is no relationship between CSR committee and the level of the voluntary disclosure of environmental disclosure.

JEL Codes - M42

References

Abba, M., Said, R. M., Abdullah, A., and Mahat, F., 2018. The Relationship between Environment Operational Performance and Environmental Disclosure of Nigerian Listed Companies. Journal of Environmental Accounting and Management, 6(1), 1-15. http://dx.doi.org/10.5890/JEAM.2018.03.001

Aerts, W., Cormier, D., and Magnan, M., 2008. Corporate environmental disclosure, financial markets and the media: An international perspective. Ecological Economics, 64(3), 643-659. http://dx.doi.org/10.1016/j.ecolecon.2007.04.012

Affes, H., and Hentati-Klila, I., 2012. Les Déterminants De L'Offre Volontaire Des Informations Societales Et L'Analyse Du Niveau De Divulgation: Cas Des Entreprises Canadiennes. Comptabilités et innovation, hal-00937904(may). https://bit.ly/3bxzIhB.

Al-Ajmi, J., 2008. Audit and reporting delays: Evidence from an emerging market. Advances in Accounting, 24(2), 217-226. http://dx.doi.org/10.1016/j.adiac.2008.08.002

Almahrog, Y., Aribi, Z. A., and Arun, T., 2018. Earnings management and corporate social responsibility: UK evidence'. Journal of Financial Reporting and Accounting, 16(2), 311-332. http://dx.doi.org/10.1108/JFRA-11-2016-0092

Asmeri, R., Alvionita, T., and Gunardi, A., 2017. CSR disclosures in the mining industry: Empirical evidence from listed mining firms in Indonesia. Indonesian Journal of Sustainability Accounting and Management, 1(1), 16-22. http://dx.doi.org/10.28992/ijsam.v1i1.23

Ballou, B., Chen, P.-C., Grenier, J. H., and Heitger, D. L., 2018. Corporate social responsibility assurance and reporting quality: Evidence from restatements. Journal of Accounting and Public Policy, 37(2), 167-188. http://dx.doi.org/10.1016/j.jaccpubpol.2018.02.001

Ben Amar, A., and Chakroun, S., 2018. Do dimensions of corporate social responsibility affect earnings management? Evidence from France. Journal of Financial Reporting and Accounting, 16(2), 348-370. http://dx.doi.org/10.1108/JFRA-05-2017-0033

Ben Rhouma, A., 2008. Etude des déterminants de la divulgation environnementale et sociale des entreprises françaises. (Doctoral dissertation), Nice.

Braam, G., and Peeters, R., 2018. Corporate sustainability performance and assurance on sustainability reports: Diffusion of accounting practices in the realm of sustainable development. Corporate Social Responsibility and Environmental Management, 25(2), 164-181. http://dx.doi.org/10.1002/csr.1447

Braam, G. J. M., Uit de Weerd, L., Hauck, M., and Huijbregts, M. A. J., 2016. Determinants of corporate environmental reporting: the importance of environmental performance and assurance. Journal of Cleaner Production, 129, 724-734. http://dx.doi.org/10.1016/j.jclepro.2016.03.039

Brown, D., Marshall, S., and Rupley, K. H., 2010. Multi-stakeholder governance: Impact on environmental disclosure. Working Paper. Portland State University.

Capron, M., and Quairel-Lanoizelée, F., 2007. La responsabilité sociale d’entreprise (3rd ed.). Paris: La Découverte.

Chatterjee, S., Hadi, A. S., and Price, B., 2000. Regression analysis by example (3rd ed. ed.). New York: John Wiley & Sons, INC.

Chen, F., Hou, Y., Richardson, G., and Ye, M., 2013. Auditor industry expertise and the timeliness and usefulness of litigation loss contingency disclosures. Working Paper. University of Toronto.

Chepurko, I., Dayanandan, A., Donker, H., and Nofsinger, J., 2018. Are socially responsible firms less likely to restate earnings? Global Finance Journal, 38, 97-109. http://dx.doi.org/10.1016/j.gfj.2018.02.002

Chih, H.-L., Shen, C.-H., and Kang, F.-C., 2008. Corporate Social Responsibility, Investor Protection, and Earnings Management: Some International Evidence. Journal of Business Ethics, 79(1), 179-198. http://dx.doi.org/10.1007/s10551-007-9383-7

Cho, E., and Chun, S., 2016. Corporate social responsibility, real activities earnings management, and corporat governance: Evidence from Korea. Asia-Pacific Journal of Accounting & Economics, 23(4), 400-431. http://dx.doi.org/10.1080/16081625.2015.1047005

Clarkson, P. M., Fang, X., Li, Y., and Richardson, G., 2013. The relevance of environmental disclosures: Are such disclosures incrementally informative? Journal of Accounting and Public Policy, 32(5), 410-431. http://dx.doi.org/10.1016/j.jaccpubpol.2013.06.008

Clarkson, P. M., Li, Y., Richardson, G. D., and Vasvari, F. P., 2008. Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(4), 303-327. http://dx.doi.org/10.1016/j.aos.2007.05.003

Clatworthy, M. A., and Peel, M. J., 2013. The impact of voluntary audit and governance characteristics on accounting errors in private companies. Journal of Accounting and Public Policy, 32(3), 1-25. http://dx.doi.org/10.1016/j.jaccpubpol.2013.02.005

Cormier, D., and Magnan, M., 1999. Corporate environmental disclosure strategies: Determinants, costs and benefits. Journal of Accounting, Auditing & Finance, 14(4), 429-451. http://dx.doi.org/10.1177/0148558X9901400403

Cormier, D., and Magnan, M., 2003. Environmental reporting management: A continental European perspective. Journal of Accounting and Public Policy, 22(1), 43-62. http://dx.doi.org/10.1016/S0278-4254(02)00085-6

Daoud, K. A. A., Ismail, K., Izah, K. N., and Lode, N. A., 2014. The timeliness of financial reporting among Jordanian companies: do company and board characteristics, and audit opinion matter? . Asian Social Science, 10(13), 191-201. http://dx.doi.org/10.5539/ass.v10n13p191

Dilla, W., Janvrin, D., Perkins, J., and Raschke, R., 2019. Do environmental responsibility views influence investors' use of environmental performance and assurance information? Sustainability Accounting, Management and Policy Journal, 10(3), 476-497. http://dx.doi.org/10.1108/SAMPJ-12-2018-0357

Ernst and Young, 2010. Regulatory change is driving audit committee agendas. Insights for North American Audit Committee Members Newsletter. InSights.

Faisal, F., Prasetya, A. R., Chariri, A., and Haryanto, H., 2018. The relationship between corporate social responsibility disclosure and earnings management: Is it a complement mechanism or a substitute mechanism? International Journal of Business Governance and Ethics, 13(1), 1-14. http://dx.doi.org/10.1504/IJBGE.2018.095411

Fauzi, F., and Locke, S., 2012. Board structure, ownership structure and firm performance: a study of New Zealand listed-firms. Asian Academy of management journal of accounting and finance, 8(2), 43-67.

Gillet-Monjarret, C., and Martinez, I., 2012. La vérification sociétale des entreprises du SBF 120: L’impact de la structure de propriété et du conseil d’administration. Comptabilité-Contrôle-Audit, 18(3), 43-66. http://dx.doi.org/10.3917/cca.183.0043

Gillet-Monjarret, C., and Riviere-Giordano, G., 2017. Sustainability assurance: A literature review. Comptabilité-Contrôle-Audit, 23(2), 11-62. http://dx.doi.org/10.3917/cca.232.0011

Gillet, C., 2010. Les comptes rendus d'assurance contenus dans les rapports de developpement durable: Une analyse des pratiques des entreprises francaises. Management & Avenir, 36(6), 35-53. http://dx.doi.org/10.3917/mav.036.0035

Glele Kakai, R., Sodjinou, E., and Fonton, N., 2006. Conditions d'application des methodes statistiques parametriques: application sur ordinateur (1st ed. ed.). Benin: Bibliotheque Nationale.

Gras-Gil, E., Palacios Manzano, M., and Hernandez Fernandez, J., 2016. Investigating the relationship between corporate social responsibility and earnings management: Evidence from Spain. BRQ Business Research Quarterly, 19(4), 289-299. http://dx.doi.org/10.1016/j.brq.2016.02.002

Gray, J. V., and Handley, S. M., 2015. Managing contract manufacturer quality in the presence of performance ambiguity. Journal of Operations Management, 38(1), 41-55. http://dx.doi.org/10.1016/j.jom.2015.08.002

Guidara, A., Khlif, H., and Jarboui, A., 2014. Voluntary and timely disclosure and the cost of debt: South African evidence. Meditari Accountancy Research, 22(2), 149-164. http://dx.doi.org/10.1108/MEDAR-09-2013-0042

Gupta, R., and Agrawal, G., 2014. Corporate Social Responsibility: A Check on Indian Banks for Responsible Investment. Paper presented at the 12th AIMS International Conference on Management.

Hooks, J., and van Staden, C. J., 2011. Evaluating environmental disclosures: The relationship between quality and extent measures. The British Accounting Review, 43(3), 200-213. http://dx.doi.org/10.1016/j.bar.2011.06.005

Iatridis, G. E., 2013. Environmental disclosure quality: Evidence on environmental performance, corporate governance and value relevance. Emerging Markets Review, 14, 55-75. http://dx.doi.org/10.1016/j.ememar.2012.11.003

Idowu, S. O., and Caliyurt, K. T., 2014. Corporate governance: An international perspective the summing up. Corporate governance. Berlin, Heidelberg: Springer. http://dx.doi.org/10.1007/978-3-642-45167-6_18

Jensen, M. C., and Meckling, W. H., 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. http://dx.doi.org/10.1016/0304-405X(76)90026-X

Joshi, P. L., Suwaidan, M. S., and Kumar, R., 2011. Determinants of environmental disclosures by Indian industrial listed companies: Empirical study. International Journal of Accounting and Finance, 3(2), 109-130. http://dx.doi.org/10.1504/IJAF.2011.043843

Kachouri, M., and Jarboui, A., 2017. Exploring the relation between corporate reporting and corporate governance effectiveness. Journal of Financial Reporting and Accounting, 15(3), 347-366. http://dx.doi.org/10.1108/JFRA-06-2016-0053

Khasharmeh, H. A., and Aljifri, K., 2010. The timeliness of annual reports in Bahrain and the United Arab Emirates: An empirical comparative study. International Journal of Business and Finance Research, 4(1), 51-71.

Khoufi, N., and Khoufi, W., 2018. An empirical examination of the determinants of audit report delay in France. Managerial Auditing Journal, 33(8/9), 700-714. http://dx.doi.org/10.1108/MAJ-02-2017-1518

Kolk, A., and Perego, P., 2010. Determinants of adoption of sustainability assurance statements: An international investigation. Business Strategy and the Environment, 19(3), 182-198. http://dx.doi.org/10.1002/bse.643

KPMG, 2015. La communication financière et extra-financière des ESN.

KPMG, 2016. Guide des bonnes pratiques des comités d’audit des sociétés foncières cotées.

Leventis, S., and Weetman, P., 2004. Timeliness of Financial Reporting: Applicability of Disclosure Theories in an Emerging Capital Market. Accounting and Business Research, 34(1), 43-56. http://dx.doi.org/10.1080/00014788.2004.9729950

Li, M., Tian, A., Li, S., and Qi, X., 2018. Evaluating the Quality of Enterprise Environmental Accounting Information Disclosure. Sustainability, 10(7). http://dx.doi.org/10.3390/su10072136

Li, Y., Gong, M., Zhang, X.-Y., and Koh, L., 2018. The impact of environmental, social, and governance disclosure on firm value: The role of CEO power. The British Accounting Review, 50(1), 60-75. http://dx.doi.org/10.1016/j.bar.2017.09.007

Madi, H. K., Ishak, Z., and Manaf, N. A. A., 2014. The impact of audit committee characteristics on corporate voluntary disclosure. Procedia: Social and Behavioral Sciences, 164, 486-492. http://dx.doi.org/10.1016/j.sbspro.2014.11.106

Mahmood, Z., Kouser, R., Ali, W., Ahmad, Z., and Salman, T., 2018. Does Corporate Governance Affect Sustainability Disclosure? A Mixed Methods Study. Sustainability, 10(1). http://dx.doi.org/10.3390/su10010207

Masoud, Z., and Talebbeydokhti, A., 2015. Examining the Relationship between Management Independence and Disclosure Quality on Earning Management of the Firms Listed on Tehran Stock Exchange. Research journal of fisheries and hydrobiology, 10(10), 568-571.

Meniaoui, Z., Halioui, K. H., and Zehri, F., 2016. CSR Disclosure And Corporate Governance: A By-Contextual Analysis. International Journal of Business & Economic Strategy, 4, 1-7.

Mnif Sellami, Y., Dammak Ben Hlima, N., and Jarboui, A., 2019. An empirical investigation of determinants of sustainability report assurance in France. Journal of Financial Reporting and Accounting, 17(2), 320-342. http://dx.doi.org/10.1108/JFRA-02-2018-0019

Mohamed, T., and Faouzi, P. J., 2014. Le Role Instrumental Et Incitatif Du Reporting Societal Dans La Gestion Des Resultats. Global Journal of Management and Business Research, 13(5), 25-39.

Morales-Raya, M., Martin-Tapia, I., and Ortiz-de-Mandojana, N., 2018. To Be or to Seem: The Role of Environmental Practices in Corporate Environmental Reputation. Organization & Environment, 32(3), 309-330. http://dx.doi.org/10.1177/1086026617753154

Naseem, M. A., Lin, J., Rehman, R. U., Ahmad, M. I., and Ali, R., 2019. Moderating role of financial ratios in corporate social responsibility disclosure and firm value. PLoS One, 14(4), e0215430. http://dx.doi.org/10.1371/journal.pone.0215430

O'Dwyer, B., and Owen, D. L., 2005. Assurance statement practice in environmental, social and sustainability reporting: a critical evaluation. The British Accounting Review, 37(2), 205-229. http://dx.doi.org/10.1016/j.bar.2005.01.005

Odoemelam, N., and Okafor, R. G., 2018. The influence of corporate governance on environmental disclosure of listed non-financial firms in Nigeria. Indonesian Journal of Sustainability Accounting and Management, 2(1), 25-50. http://dx.doi.org/10.28992/ijsam.v2i1.47

Ofoegbu, G. N., Odoemelam, N., and Okafor, R. G., 2018. Corporate board characteristics and environmental disclosure quantity: Evidence from South Africa (integrated reporting) and Nigeria (traditional reporting). Cogent Business & Management, 5(1). http://dx.doi.org/10.1080/23311975.2018.1551510

Oladipupo, A. O., and Okafor, C. A., 2013. Relative contribution of working capital management to corporate profitability and dividend payout ratio: Evidence from Nigeria. International Journal of Business and Finance Research, 3(2), 11-20.

Ong, T. S., Tho, H. S., Goh, H. H., Thai, S. B., and Teh, B. H., 2016. The relationship between environmental disclosures and financial performance of public listed companies in Malaysia. International Business Management, 4(10), 461-467. http://dx.doi.org/10.36478/ibm.2016.461.467

Owusu-Ansah, S., 2000. Timeliness of corporate financial reporting in emerging capital markets: Empirical evidence from the Zimbabwe Stock Exchange. Accounting and Business Research, 30(3), 241-254. http://dx.doi.org/10.1080/00014788.2000.9728939

Owusu-Ansah, S., and Leventis, S., 2006. Timeliness of corporate annual financial reporting in Greece. European Accounting Review, 15(2), 273-287. http://dx.doi.org/10.1080/09638180500252078

Pavaloaia, L., 2015. Environmental Information Reporting and Certification in Annual Reports. Procedia Economics and Finance, 20, 503-509. http://dx.doi.org/10.1016/S2212-5671(15)00102-1

Pérez-Cornejo, C., de Quevedo-Puente, E., and Delgado-García, J. B., 2019. How to manage corporate reputation? The effect of enterprise risk management systems and audit committees on corporate reputation. European Management Journal, 37(4), 505-515. http://dx.doi.org/10.1016/j.emj.2019.01.005

Peters, G. F., and Romi, A. M., 2012. The effect of corporate governance on voluntary risk disclosures: Evidence from greenhouse gas emission reporting. https://bit.ly/2UkQo6j.

Peters, G. F., and Romi, A. M., 2013. Discretionary compliance with mandatory environmental disclosures: Evidence from SEC filings. Journal of Accounting and Public Policy, 32(4), 213-236. http://dx.doi.org/10.1016/j.jaccpubpol.2013.04.004

Peters, G. F., and Romi, A. M., 2014. Does the voluntary adoption of corporate governance mechanisms improve environmental risk disclosures? Evidence from greenhouse gas emission accounting. Journal of Business Ethics, 125(4), 637-666. http://dx.doi.org/10.1007/s10551-013-1886-9

Plumlee, M., Brown, D., Hayes, R. M., and Marshall, R. S., 2015. Voluntary environmental disclosure quality and firm value: Further evidence. Journal of Accounting and Public Policy, 34(4), 336-361. http://dx.doi.org/10.1016/j.jaccpubpol.2015.04.004

Ponte, E. B., and Bednarova, M., 2015. The use of YouTube for sustainability reporting. AECA: Revista de la Asociación Española de Contabilidad y Administración de Empresas(111), 10-12.

Prasad, M., Mishra, T., and Kalro, A. D., 2017. Environmental disclosure by Indian companies: an empirical study. Environment, Development and Sustainability, 19(5), 1999-2022. http://dx.doi.org/10.1007/s10668-016-9840-5

Prior, D., Surroca, J., and Tribo, J. A., 2008. Are Socially Responsible Managers Really Ethical? Exploring the Relationship Between Earnings Management and Corporate Social Responsibility. Corporate Governance, 16(3), 160-177. http://dx.doi.org/10.1111/j.1467-8683.2008.00678.x

Raman, K., and Shahrur, H., 2008. Relationship, specific investments and earnings management: Evidence on corporate suppliers and customers. The Accounting Review, 83(4), 1041-1081. http://dx.doi.org/10.2308/accr.2008.83.4.1041

Ramesh, B., and Mendes, M. S., 2015. Corporate social responsibility-perspectives in indian context. Australian Journal of Business and Economic Studies, 1(2), 93-101.

Rezaei, F., and Shahroodi, P., 2015. The relationship between audit opinion change and timing of disclosure. International Journal of Innovation and Applied Studies, 10(3), 778-790.

Riviere-Giordano, G., 2007. La qualité des informations sociétales: Une expérimentation relative à l’audit environnemental. Université Montpellier 1

Rodrigue, M., Magnan, M., and Cho, C. H., 2013. Is environmental governance substantive or symbolic? An empirical investigation. Journal of Business Ethics, 114(1), 107-129. http://dx.doi.org/10.1007/s10551-012-1331-5

Rupley, K. H., Brown, D., and Marschall, R. S., 2012. Governance, media and the quality of environmental disclosure. Journal of Accounting and Public Policy, 31(6), 610-640. http://dx.doi.org/10.1016/j.jaccpubpol.2012.09.002

Schmidt, J., and Wilkins, M. S., 2012. Bringing darkness to light: The influence of auditor quality and audit committee expertise on the timeliness of financial statement restatement disclosures. Auditing, 32(1), 221-244. http://dx.doi.org/10.2308/ajpt-50307

Shahab, Y., and Ye, C., 2018. Corporate social responsibility disclosure and corporate governance: empirical insights on neo-institutional framework from China. International Journal of Disclosure and Governance, 15(2), 87-103. http://dx.doi.org/10.1057/s41310-018-0038-y

Simnett, R., Vanstraelen, A., and Fong Chua, W., 2009. Assurance on Sustainability reports: An International Comparison. The Accounting Review, 84(3), 937-967. http://dx.doi.org/10.2308/accr.2009.84.3.937

Singhania, M., and Gandhi, G., 2015. Social and environmental disclosure index: Perspectives from Indian corporate sector. Journal of Advances in Management Research, 12(2), 192-208. http://dx.doi.org/10.1108/JAMR-12-2013-0069

Spence, M. A., 1973. Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355-379. http://dx.doi.org/10.2307/1882010

Ussahawanitchakit, P., 2011. Disclosure Quality, Corporate Citizenship and Corporate Image: Evidence from Thai Listed Firms. International journal of business research, 11(4), 1-8.

Welbeck, E. E., Owusu, G. M. Y., Bekoe, R. A., and Kusi, J. A., 2017. Determinants of environmental disclosures of listed firms in Ghana. International Journal of Corporate Social Responsibility, 2(1), 11. http://dx.doi.org/10.1186/s40991-017-0023-y

Wooldridge, J. M., 2002. Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press.

Zhang, Y., and Liao, L., 2015. Corporate Social Responsibility Assurance: Theory, Regulations and Practice in China Social Audit Regulation (pp. 131-154). Cham: Springer. http://dx.doi.org/10.1007/978-3-319-15838-9_7

Zinsou, K. M., 2013. Effets de l’adoption des normes IFRS sur les pratiques de divulgation d’informations financières à caractère environnemental des sociétés cotées canadiennes : Cas des dispositions du règlement 51-102 des ACVM. Mémoire présenté en vue de l’obtention du grade de maîtrise en sciences ès gestion.

Downloads

Published

2020-03-28

How to Cite

Marwa, M., Salhi, B., & Jarboui, A. (2020). Environmental Audit and Environmental Disclosure Quality. Scientific Annals of Economics and Business, 67(1), 93–115. https://doi.org/10.47743/saeb-2020-0007

Issue

Section

Articles