Disaggregating air, water and renewable energy disclosures in developing economies: the role of regulatory impact and board characteristics

Anup Kumar Saha and Imran Khan

Journal of Applied Accounting Research, 2024, vol. 26, issue 2, 498-530

Abstract: Purpose - This study examines how board characteristics influence air, water and renewable energy (AWR) disclosures in an emerging economy. It argues for the necessity of separating these disclosures to address unique environmental impacts and stakeholder concerns. Design/methodology/approach - Using longitudinal data from environmentally sensitive firms (2014–2022), a disclosure index based on the Global Reporting Initiative (GRI) framework was developed to quantify AWR separately. To address potential statistical issues such as endogeneity and selection bias, the analysis employed a set of robust regression models, including the industry fixed effects (FE) model, a lagged model and a two-stage least squares (2SLS) model. Findings - Board size and audit committees positively influence all AWR disclosures, while foreign directors significantly impact air and renewable energy disclosures. Board meetings negatively affect water disclosures. Surprisingly, board independence shows no significant impact, and gender diversity has no notable relationship. Post-amendment, firms increased AWR disclosures, though participation remains limited. Research limitations/implications - Grounded in legitimacy theory, this study contributes to the literature by demonstrating how separating the unique characteristics of AWR disclosures offers stakeholders more precise insights into how firms manage specific environmental concerns. The findings are based on data from listed firms in Bangladesh and may not be generalisable to unlisted firms or other regions. Practical implications - The study emphasises the importance of distinct AWR reporting, offering valuable insights for regulators and corporate boards to improve transparency and sustainability practices. Social implications - Separating AWR disclosures provides stakeholders with clearer assessments of firms' environmental performance, promoting accountability and informed decision-making. Originality/value - This study uniquely emphasises the need for disaggregating air, water and renewable energy disclosures in emerging economies. By focussing on each environmental issue separately, the research highlights how distinct disclosures offer clearer insights into how firms address specific environmental challenges, such as air pollution, water management and the transition to renewable energy sources. This disaggregation is essential for stakeholders – particularly regulators, investors and policymakers – to assess and respond to firms' sustainability efforts accurately.

Keywords: Air disclosure; Water disclosure; Renewable energy disclosure; Board characteristics; Regulatory influence; Legitimacy theory (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaarpp:jaar-08-2023-0233

DOI: 10.1108/JAAR-08-2023-0233

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