Environmental and Social Disclosures and Firm Risk

Mohammed Benlemlih (), Amama Shaukat (), Yan Qiu () and Grzegorz Trojanowski ()
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Mohammed Benlemlih: University of Grenoble Alpes, CERAG, CNRS
Amama Shaukat: University of Essex
Yan Qiu: University of Manchester
Grzegorz Trojanowski: University of Exeter Business School

Journal of Business Ethics, 2018, vol. 152, issue 3, No 2, 613-626

Abstract: Abstract We 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 their stakeholders. This in turn can help mitigate the firms' 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.

Keywords: Environmental and social disclosures; Firm risk; Voluntary disclosure; Corporate social responsibility; Stakeholder theory; Resource-based view; Risk management (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (84)

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DOI: 10.1007/s10551-016-3285-5

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