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Voluntary Environmental Disclosure Quality and Firm Value: Further Evidence
Journal of Accounting and Public Policy (2015)
  • Marlene Plumlee, University of Utah
  • Darrell Brown, Portland State University
  • Rachel M. Hayes, University of Utah
  • Scott Marshall, Portland State University
This study reexamines the relationship between the quality of a firm’s voluntary environmental disclosures and firm value by exploring the relationship between the components of firm value (expected future cash flows and cost of equity) and voluntary environmental disclosure quality. We measure voluntary environmental disclosure quality using a disclosure index consistent with the Global Reporting Initiative (GRI, 2006) disclosure framework for a sample of US firms across five industries. In addition to overall disclosure quality, we consider the type (i.e., hard/soft) and the nature (i.e., positive/neutral/negative) of the disclosure in our analysis. Our analyses provide evidence that voluntary environmental quality is associated with firm value through both the cash flow and the cost of equity components, consistent with our expectations. More importantly, however, we demonstrate that both the type and nature of the environmental disclosures is informative in establishing the predicted relations. Thus, in addition to providing evidence on the association between voluntary disclosure quality and firm value, our results highlight the benefit of parsing broader measures (e.g. voluntary environmental disclosure quality) when examining complex relationships.
Publication Date
July, 2015
Citation Information
Plumlee, Marlene, Rachel Hayes, Darrell Brown and R. Scott Marshall. 2015. Voluntary environmental disclosure quality and firm value: Further evidence. Journal of Accounting and Public Policy, 34 (4): 336–361.