Environmental and Social Disclosures and Firm Risk

ArticleWe examine the link between a firm’s environmental (E) and social (S) disclosures and measures of its risk including total, systematic, and idiosyncratic risk. While we do not find any link between a firm’s E and S disclosures and its systematic risk, we find a negative and significant association between these disclosures and a firm’s total and idiosyncratic risk. These are novel findings and are consistent with the predictions of the stakeholder theory and the resource based view of the firm suggesting that firms which make extensive and objective E and S disclosures promote corporate transparency that can help them build a positive reputation and trust with its stakeholders, which in turn can help mitigate the firm’s idiosyncratic/operational risk. These findings are important for all corporate stakeholders including managers, employees, and suppliers who have a significant economic interest in the survival and success of the firm

Impact of Non-financial Disclosure Scores on the Cost of Equity Capital: Evidence from European Data in the Light of the Subprime Crisis

International audienceThis chapter explores the relationship between social, governance and environmental disclosure scores, on one hand, and the cost of capital, on the other. Its originality is the focus on the quality of corporate social responsibility (CSR) disclosure by studying global CSR at the same time as its three constituent dimensions. The empirical data it uses comes from Euronext SBF 120 companies over the period 2006 through 2011. The longitudinal study covers two separate periods (2006–2008 and 2009–2011). The corporate social responsibility disclosure scores (global, environment, social or governance) have an influence on the cost of capital. Moreover, financial analyst recommendations did, on the other hand, help lower the cost of capital. Lastly, the study shows that since 2009, financial analysts have increasingly taken the quality of CSR information disclosure into account in their Euronext SBF 120 stock recommendations

Monitoring intensity and stakeholders' orientation: How does governance affect social and environmental disclosure?

The aim of the paper is to investigate the effects of the corporate governance model on social and environmental disclosure (SED). We analyze the disclosures of the 100 U.S. Best Corporate Citizens in the period 2005–2007, and we posit a series of simultaneous relationships between different attributes of the governance system and a multidimensional construct of corporate social performance (CSP). We consider both the extent and the quality of SED, with the purpose of identifying increasing levels of corporate commitment to stakeholders and shedding some light on whether SED is used as a signal or rather as a legitimacy tool. Our empirical evidence shows that the stakeholders’ orientation of corporate governance is positively associated with CSP and SED. On the other hand, we do not find support for the monitoring intensity of corporate governance being negatively associated with social performance. We also find that CSP in the “product” dimension is positively associated with the extent and quality of SED whilst CSP in the “people” dimension is negatively associated with the extent and quality of SED. At a time when shareholders and stakeholders share more common aspects in their relationships with firms, this is a significant area to explore and this research fills an important lacuna in this respect