The Impact of Environmental Reporting on Adverse Risk of Companies Listed on the Tehran Stock Exchange

Subject Areas : Financial Management

حمیدرضا محمدی ¹ , Amirhossein Taebi Noghondari ²

1 - PhD Student, Accounting Department, Islamic Azad University, Kerman Branch, Kerman, Iran
2 - Assistant Professor, Department of Accounting, Islamic Azad University, Kerman Branch, Kerman, Iran

Received: 2024-08-05 Accepted : 2024-12-12 Published : 2024-12-19

Keywords: Environmental Reporting, Risk, Adverse Risk, Tehran Stock Exchange. ,

Abstract :

In the early 1980s, sustainability shifted its focus from social reporting to environmental reporting. This was due to the growth of environmental challenges and the challenges companies face, such as pollution, land degradation, and oil spills. As stakeholders became more aware of the impact of companies on the environment, some companies began to disclose environmental issues in their annual reports. Voluntary reporting of environmental issues in annual reports allows companies to disclose desirable information about their environmental activities. Companies seek to use environmental reporting to disclose information related to their contribution to value creation and the achievement of sustainable development goals. This study aims to examine the impact of environmental reporting on the adverse risk of companies on the stock exchange. For this purpose, the environmental disclosure information of 120 companies listed on the Tehran Stock Exchange during 2019-2023 was examined using panel data analysis, and then regression and correlation analysis were used to test the hypothesis. The results showed that the more environmental reporting, the more adverse risk will be significantly reduced. In other words, there is a negative and significant relationship between environmental reporting and adverse risk.

References:

Alshehhi, A., Nobanee, H., & Khare, N. (2018). The Impact of Sustainability Practices on Corporate Financial Performance: Literature Trends and Future Research Potential. Sustainability, 10, 494. https://doi.org/10.3390/su10020494
Alslihat, N., Alrawashdeh, N., Al-Ali, S., Al – Omari, M., Gazzaz, A. a., & Alali, H. (2017). Accounting disclosure of both financial and non-financial information in the light of international accounting standards. International Journal of Economic Research, 14(12), 105-118.
Azizi, S., Salari, H., Ranjbar, M. H., & Khodadadi, D. (2010). Presenting a comprehensive model of the relative importance of environmental accounting indicators using structural equations. Empirical Studies in Financial Accounting, 17(66), 173-203. [In Persian]
Bani Mahd, B., Taleb Nia, Q., & Azoji, H. (2010). Investigating the Relationship Between Environmental Performance and Financial Performance. Financial Accounting and Auditing Researches, 1(3), 149-174 [In Persian]
Basuki, B. (2015). Eco-Efficiency and Sustainable Development as Efforts to Produce Environmentally Friendly Product: An Exploratory Case Study. Issues in Social and Environmental Accounting, 9, 199-218.
Deegan, C., & Gordon, B. (1996). A Study of the Environmental Disclosure Practices of Australian Corporations. Accounting and Business Research, 26, 187-199.
Dey, P. K., Petridis, N. E., Petridis, K., Malesios, C., Nixon, J. D., & Ghosh, S. K. (2018). Environmental management and corporate social responsibility practices of small and medium sized enterprises. Journal of Cleaner Production, 195, 687-702. https://doi.org/10.1016/j.jclepro.2018.05.201
Emma, N., & Nilsson, K. (2021). Organisational Measures and Strategies for a Healthy and Sustainable Extended Working Life and Employability-A Deductive Content Analysis with Data Including Employees, First Line Managers, Trade Union Representatives and HR-Practitioners. Int. J. Environ. Res. Public Health, 18, 5626.
Fakhari, H., Malekian, E., & Jafaei Rahni, M. (2018). Explanation and ranking of environmental, social and corporate governance reporting components and indicators using the Analytic Hierarchy Process in listed companies. Value and Behavioral Accounting, 2(4), 153-187 [In Persian]
Habib, A., Bhuiyan, M. B. U., & Wu, J. (2021). Corporate Governance Determinants of Financial Restatements: A Meta-Analysis. International Journal of Accounting, 56(1). https://doi.org/10.1142/S1094406021500025
Haixia, W., & Jianping, L. (2023). The relationship between environmental disclosure and financial performance: mediating effect of economic development and information penetration. Economic research-Ekonomska istraživanja, 36(1), 116-142. https://doi.org/10.1080/1331677X.2022.2072355
Kulke, L., von Duhn, B., Schneider, D., Schneider, D., & Rakoczy, H. (2018). Is Implicit Theory of Mind a Real and Robust Phenomenon? Results From a Systematic Replication Study. Psychological Science. https://doi.org/10.1177/0956797617747090
Lackmann, J., Ernstberger, J., Ernstberger, J., Stich, M., & Stich, M. (2011). Market Reactions to Increased Reliability of Sustainability Information. Journal of Business Ethics, 107(2). https://doi.org/10.1007/s10551-011-1026-3
Levine, R. F. (2006). Social Inequality. Contemporary Sociology, 35(1), 15-16. https://doi.org/10.1177/009430610603500109
Li, Z., & Zheng, L. (2018). The Impact of Artificial Intelligence on Accounting 2018 4th International Conference on Social Science and Higher Education (ICSSHE 2018). https://doi.org/10.2991/icsshe-18.2018.203
Loh, L., Thomas, T., & Wang, Y. (2017). Sustainability Reporting and Firm Value: Evidence from Singapore-Listed Companies. Sustainability, 9, 2112. https://doi.org/10.3390/su9112112
Mahmoudi, J., & Pourshahabi, V. (2023). Investigating the effect of financial intelligence value on employees' risk taking with the mediating role of social capital. Journal of value creating in Business Management, 2(4), 25-45. https://doi.org/10.22034/jvcbm.2023.314246.1009 [In Persian]
Mohammadi, J., & Khuzin, A. (2018). Theoretical Framework of Sustainability Reporting. Journal of Management and Accounting Studies, 3(3). [In Persian]
O., C., Oncioiu, I., Iuga, I. C., & Stan, S. (2020). Impact of Sustainability Reporting and Inadequate Management of ESG Factors on Corporate Performance and Sustainable Growth. Sustainability, 12, 8536. https://doi.org/10.3390/su12208536
Odera, O., Scott, A. H. S., & Gow, J. (2016). Factors influencing corporate social and environmental disclosures: A systematic review. International Journal of Business Governance and Ethics, 11(2). https://doi.org/10.1504/IJBGE.2016.078199
Reddy, K., & Gordon, L. W. (2010). The effect of sustainability reporting on financial performance: An empirical study using listed companies. Journal of Asia Entrepreneurship and Sustainability, 6(2), 19-42.
Tsoukas, H. (2010). Introducing perspectives on process organization studies. In: Hernes, Tor and Maitlis, Sally, (eds.) Process, sensemaking, and organizing. Perspectives on process organization studies 1-26.Oxford University Press. Oxford.
Zhang, H., Zhang, Y., Zhou, S., & He, Y. (2020). Corporate cash holdings and financial constraints-An analysis based on data on china at company level after the global financial crisis. Emerging Markets Finance and Trade, 56(7), 1490-1503.