Voluntary disclosure of scope 3 greenhouse gas emissions and earnings management: Evidence from UK companies

Alpaslan Yasar and Neriman Yalçın

Cogent Business & Management, 2023, vol. 10, issue 3, 2275849

Abstract: Climate change information, especially greenhouse gas (GHG) emissions disclosures (Scopes 1, 2 and 3), has recently attracted considerable interest from investors, companies, regulators, and other stakeholders. This study examines the relationship between voluntary scope 3 GHG emissions disclosure and earnings management (EM), proxied by accruals-based earnings management (AEM) and real earnings management (REM). Based on a sample of 2,100 firm‐year observations for 420 non-financial UK-listed firms over the period 2016–2020, we find a negative but insignificant relationship between voluntary scope 3 GHG emissions disclosure and EM. Our results are robust to alternative sensitivity tests. Our findings imply that voluntary environmental disclosure (scope 3 GHG emissions) is not a determining factor for UK firms to engage in EM.

Date: 2023
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DOI: 10.1080/23311975.2023.2275849

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