The Verbal Tone in Mandatory Environmental Disclosures: Evidence from Changes in Disclosures Following SEC Guidance

Shu Feng and Lucia S. Gao

Social and Environmental Accountability Journal, 2020, vol. 40, issue 2, 116-139

Abstract: This study investigates whether the verbal tone of environmental disclosures in companies’ annual reports changed following SEC interpretive guidance released in 2010. The content analysis software DICTION is used to construct measures of verbal tone and size of the disclosures. For a sample of companies in both environmentally sensitive and non-sensitive industries, we find an increase in the degree of ‘realism’ and ‘certainty’ of the disclosures following the release of the SEC guidance. The results hold after controlling for environmental performance and firm specific characteristics. In addition, the size of environmental disclosures increased in the year preceding the release of the guidance, suggesting that companies may have anticipated an interpretive release from the SEC. Furthermore, there were no significant changes in the size and verbal tone of voluntary environmental disclosures over the same time period, suggesting that the changes in the annual reports filed with the SEC resulted primarily from companies’ responses to the interpretive guidance. These findings show that impressions management is less prevalent in mandated environmental disclosures.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/0969160X.2020.1719172 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:seaccj:v:40:y:2020:i:2:p:116-139

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REAJ20

DOI: 10.1080/0969160X.2020.1719172

Access Statistics for this article

Social and Environmental Accountability Journal is currently edited by Jeffrey Unerman, John Ferguson and Jan Bebbington

More articles in Social and Environmental Accountability Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().