The Benefits and Costs of Disclosing Information about Risks: What Do We Know about Right‐to‐Know?

Following the attacks of September 11, 2001, the Environmental Protection Agency and other government agencies removed information from their web sites that they feared could invite attacks on critical public and private infrastructure. Accordingly, the benefits and costs of environmental information disclosure programs have come under increasing scrutiny. This article describes a framework for examining these benefits and costs and illustrates the framework through brief case studies of two information disclosure programs: risk management planning and materials accounting. The article outlines what we know and still need to find out about information disclosure programs in order to appropriately balance benefits and costs.     

Determinants of voluntary CSR disclosure: empirical evidence from Germany

Currently, companies spend a great deal of effort on Corporate Social Responsibility (CSR) disclosures. CSR disclosure relates to the provision of information on companies’ environmental and social performance. From an economic perspective, companies might disclose this information to avoid or decrease potential political costs. We construct a CSR disclosure index based on the Global Reporting Initiative (GRI) guidelines. Using content analysis, we analyze 130 listed German companies’ CSR disclosures (470 firm-year observations) to investigate the determinants of these voluntary disclosure activities. Our results show that, consistent with the political cost theory, German companies’ disclosures of all CSR issues are affected by their visibility, shareholder structure, and relationship with their US stakeholders. In addition, higher profitability is associated with more environmental disclosures. Finally, size and industry membership affect the amount of CSR disclosure.     

Implementing ISO 14001—An International Survey Assessing the Benefits of Certification

The costs and benefits of ISO 14001 certification result in firms choosing this route as a tool for proactive environmental management, according to a survey of 131 companies across the world. The following paper examines the motivation to pursue ISO 14001 certification for companies in developed and developing countries. While the costs of ISO 14001 certification vary widely, almost all respondents report substantial cost savings as a result of implementation. This was especially the case in developing countries, where enthusiasm about the standard (among certified firms) is very high. Contrary to the concerns voiced by skeptics, many firms stated that they decided to implement an ISO 14001 in order to “be a good neighbor” and to raise their employee's level of environmental awareness. Surprisingly, very few respondents stated that their primary motivations for implementation were profit-related. The majority of firms appear to be using ISO 14001 as a tool for proactive environmental management, as its creators intended.     

企业信息披露中的模仿行为研究——基于制度理论的分析

本文在制度理论的分析框架下,研究合法性压力和不确定性条件下企业信息披露中的模仿行为及由此导致的制度同形现象.本文以2006-2010年我国重污染行业上市公司年报中的环境信息披露为研究对象,发现企业环境信息披露存在同形性和模仿行为,且属于模仿其它企业平均水平的频率模仿,而不是模仿领先者.本文将已有的信息披露研究从经济学分析的视角向经济社会学进行拓展,丰富了对信息披露过程中决策者认知过程和制度化过程的认识,同时也透过信息披露中的模仿行为从更加微观的层面为制度化过程中的趋同现象提供了新的证据.     

Challenges and solutions for marketing in a digital era

Internet usage continues to explode across the world with digital becoming an increasingly important source of competitive advantage in both B2C and B2B marketing. A great deal of attention has been focused on the tremendous opportunities digital marketing presents, with little attention on the real challenges companies are facing going digital. In this study, we present these challenges based on results of a survey among a convenience sample of 777 marketing executives around the globe. The results reveal that filling “talent gaps”, adjusting the “organizational design”, and implementing “actionable metrics” are the biggest improvement opportunities for companies across sectors.     

Business model in IPO prospectuses: insights from Italian Innovation Companies

How do companies to be listed deal with the voluntary disclosure of their business model? Is it true that firms with greater intellectual capital resources and technological innovation endowments are less prone to full disclosure? This paper aims to examine the choices of voluntary disclosure of the business model made by three Italian manufacturing companies in initial public offering prospectuses. The objective is to explore whether any differences exist and may be related to the type of innovation underlying the firms’ business model. A series of interviews with the top management allows to deeply understand the business model of each company. A content analysis allows to measure the level of disclosure and identify the strategic concepts of the business model and their relevance. The study provides evidence that companies with a business model based on technology-push and design-driven innovation have a lower propensity to the full disclosure of their intangible resources, particularly of those based on knowledge as some could be also invisible. The paper contributes to the ongoing debate on the role of business and financial reporting.     

Corporate social responsibility disclosure and market valuation: evidence from Spanish listed firms

Using a sample of listed Spanish companies pertaining to the IBEX35 index for the period 2007–2011, this paper examines whether those firms with higher CSR disclosure ratings are more valued by market participants. This study also complements the literature addressing the value relevance of CSR disclosure by further analyzing not only the direct effects of CSR reporting on stock prices but also its indirect effects through its interaction with main accounting variables (i.e., earnings and book value of equity). CSR reports can also affect stock price indirectly because the sustainability report may be perceived by investors to be a source of further and complementary information regarding the nature, composition and trends of the traditional value-relevant accounting variables. Finally, this study also analyzes whether CSR disclosure by firms operating in environmentally-sensitive industries is assessed differently by market participants than CSR disclosure by companies operating in other industries. By using a modified Ohlson (Contemp Account Res 1:661–687, 1995) model, it is found that CSR disclosure do have both a direct and indirect effect on stock prices by modifying the value-relevance of earnings and book value of equity. Moreover, CSR disclosure by companies operating in environmentally-sensitive industries is associated with higher market valuations than CSR disclosure by companies operating in nonsensitive industries. This may be due to the fact that CSR disclosures provide information that allow investors to make better assessments of the increased risk related to potential litigation and future environmental liabilities, thereby reducing information asymmetries and the risk of adverse selection.     

Safe Companies: An Alternative Approach to Operationalizing Sustainability

The track record of the past decade shows that sustainability has had a difficult time getting traction inside corporations. In large measure, this is because it is a fuzzy and unproven concept – business executives require clarity to move forward. One way around this hurdle is by focusing on safety, which can provide an effective platform for helping companies make the transition to sustainability. In many ways, the two concepts are quite similar. Both are about increasing the prospects for human health and happiness. Yet, unlike sustainability, safety is well understood and actionable, and it is also an increasingly high priority in our post-9-11 era. A focus on safety provides senior executives a path up a Safety-Sustainability Continuum that starts with the workplace and proceeds to traditional functional business areas such as safer R&D and correspondingly products. Ultimately this leads to activities that are intended not only to reduce a company's negative “footprint” (for instance, by making products less toxic) but by expanding their positive “footprint”, (e.g. by pursuing ecosystem restoration and regeneration). Ideally, a campaign to use safety as an entry point for operationalizing sustainability will have a dual emphasis, focusing equally on the human benefits of safety and the business case for pursuing safety (and, ultimately, sustainability).     

What right-to-know means for environmental strategies

Every environmental strategist spends time trying to anticipate environmental regulation. John S. Guttmann, director of the law firm Beveridge & Diamond based in Washington, D.C. provides CES readers with a quick study into the significant changes that are occuring in the nature and extent of public participation. Guttmann explains how the expanding nature of community “right-to-know” and direct public involvement are becoming drivers for regulatory change. His concluding comments blends critical analysis of current U.S. Environmental Protection Agency information of disclosure initiatives with an evaluation of recent EPA public involvement programs. Guttmann identifies how these changes might impact corporate disclosure, and offers valuable insight on the pitfalls of attempting to satisfy the growing public demand for information and involvement.     

Financial Reporting,Private Disclosure and the Corporate Governance Role of Financial Institutions

This paper explores how large UK financial institutions (FIs) pursued a private corporate governance agenda with their portfolio companies. It also investigates the role of financial reporting in private and public corporate governance. The case financial institutions argued that the limited quality of public information, especially in financial reports, was a major constraint on their ability to act in fund management and corporate governance roles. However, the financial reporting cycle determined a private institutional and company meeting cycle and this created opportunities for private information collection and for governance influence by FIs. In addition, the perceived limitations of public governance mechanisms such as voting encouraged private governance approaches. As a result, the case financial institutions had the incentive and the means to improve the quality of their sources of corporate information and to obtain a competitive edge over other financial institutions and the market through their direct contact with companies. Despite the limitations of public information, the paper reveals how public disclosure in financial statements and the financial reporting cycle played a central role in corporate governance. Public sources of information were combined with private sources to create a financial institutional knowledge advantage. The institutions used this knowledge to diagnose problem areas in strategy, management quality, and the effectiveness of the board, and their impact on financial performance. The financial reporting cycle meant that the quasi insider financial institution had the access opportunity and the joint public/private insight to influence companies across a wide corporate governance agenda and in a range of corporate circumstances. The case institutions exploited these private access and knowledge advantages for investment purposes and for Cadbury style corporate governance purposes. Thus, the private governance process was critically dependent on the FI knowledge advantage, which in turn relied on both financial reports and private disclosure. This wide ranging governance behaviour by institutions corresponds to recommendations subsequently made by the Hampel report in 1998 concerning UK corporate governance. The paper ends by exploring how the private institutional and company meeting agenda can suggest new directions for financial reporting and public disclosure and how this can further improve public and private corporate governance.     

Die Bedeutung von Steuern in der Nachhaltigkeitsberichterstattung: Eine international vergleichende empirische Analyse

Due to tax competition, high levels of national debt and promulgated tax avoidance strategies of large corporations, there is a growing interest of multiple stakeholders in taxation putting taxes on the corporate social responsibility (CSR) agenda. This study empirically examines the relevance of taxes in sustainability reports of 90 corporations listed on the Dow Jones 30, DAX 30 and FTSE 100. The findings show that 54,4?% of these corporations disclose tax information in their reports. The quality of disclosure is examined using a scoring model based on the tax-related performance indicators of theGlobal Reporting Initiative Guidelines and two standards for voluntary disclosure of tax information. In most cases, disclosure practices are of low quality. However, there are a few corporations providing high disclosure quality, especially in the UK. By analyzing the determinants of disclosure, this study demonstrates that extractive companies and companies that have been object of negative tax-related media coverage tend to disclose more information. Furthermore, corporations with higher profitability and high performance in CSR rankings rather disclose tax information.     

Providing reliable information to clients: The case of environmental remediation

This article provides an overview and discusses the implications for the recognition, measurement, presentation, and disclosure requirements for environmental remediation liabilities. The overview and discussion is based upon the American Institute of Certified Public Accountants' Statement of Position (SOP) 96-1 “Environmental Remediation Liabilities.” The article concludes with a discussion of the CPAs reporting responsibility and related issues with respect to this major contemporary issue. A primary goal of CPA firms is to provide quality service to clients, In the realm of financial reporting, quality service means providing clients with reliable information. An increasing number of small and large businesses are exposed to high costs and large potential liability for cleanup of environmentally hazardous material. Certified public accountants who provide compilation, review, or audit services with respect to a non-public entity's financial statements need to be aware of the disclosure and reporting implications of companies confronted with disposal and cleanup of hazardous material.     

Environmental information disclosure and stakeholder involvement: Searching for common ground

In a recent national summit hosted by The Vanderbuilt Center for Environmental Management Studies, high level corporate, environmental, and government officials came together to discuss the growing trend towards the disclosure of environmental information as a tool to increase public accountability. Both regulators and environmentalists showed interest in continuing to utilize and, in many cases expeand, existing environmental information disclosure programs. The summit was viewed as a catalyst in the ongoing national discussion of the efficacy of this evolving area of government policy. This article highlights some of the key results of this event and offers suggested next steps to address credibility and effectiveness in environmental information disclosure.     

Business–Government Cooperation in Environmental Decision-Making

Environmental problems in the United States often are marked by adversarial relationships between businesses and government. Adversarial decision-making creates delays and often fails to achieve satisfactory results. Cooperative relationships might enable businesses and governments to better solve pressing environmental problems. In many instances, governments and businesses could achieve “win–win” environmental solutions that were good for the environment and economy. Though people in government and business endorse these approaches, efforts to put such principles into practice have proved difficult. This paper reviews the movement toward greater cooperation in environmental decision-making, showing both advances that have taken place and limits to further progress.     

Stock screening with use of multiple criteria decision making and optimization

A new method for the stock ranking based on the multiple criterion decision making and optimization is proposed. Two general criteria are used in the analysis. The first of them is based on the financial indices and may be treated as the criterion of firm's “health” or its financial performance. The second one is the two-criteria performance of firm based on the stock prices. It represents the firm's market success. The method rests on the selection of the stocks with a great correlation of the firm's financial performance and its market success. The local criteria are built in the form of the membership function of corresponding fuzzy subsets. Two different strategies for stock ranking and three most popular methods for local criteria aggregation are compared. As the example the values of financial rations and prices from database comprising the data of 162 firms from subsector of the biotechnology of US economy were used. It is shown that the proposed method makes it possible to select a small group of “good” stocks characterized by a great coincidence of firm's financial performance and its market success. The method rejects from the consideration all the “unsafe” firms, i.e., such ones that their market success is based rather on the public relations, rumors and other rather unreliable information. The method is addressed to those who prefer to select for a portfolio only the firms which demonstrate the closeness of their overall financial performance in the past year and success in the Stock Exchange in the following year.     

Stringency of Workplace Air Contaminant Exposure Limits: A Case Study of OSHA Risk Management

Political context may play a large role in influencing the efficiency of environmental and health regulations. This case study uses data from a 1989 update of the Occupational Safety and Health Administration (OSHA) Permissible Exposure Limits (PELs) program to determine the relative effects of legislative mandates, costly acquisition of information by the agency, and pressure applied by special interest groups upon exposure standards. The empirical analysis suggests that federal agencies successfully thwart legislative attempts to limit agency discretion, and that agencies exercise bounded rationality by placing greater emphasis on more easily obtained information. The 1989 PELs were less significantly related to more costly information, contained safety factors for chemicals presenting relatively more ambiguous risks, and the proposed standard stringencies showed evidence of being influenced by vying industry and labor interests.     

Democratizing Risk Management: Successful Public Involvement in Local Water Management Decisions

This paper discusses a successful public involvement effort that addressed and resolved several highly controversial water management issues involving environmental and flood risks associated with an electrical generation facility in British Columbia. It begins with a discussion of concepts for designing public involvement, summarizing research that indicates why individuals and groups may find it difficult to make complex choices. Reasons for public involvement, and the range of current practices are discussed. Next, four principles for designing group decision process are outlined, emphasizing decision-aiding concepts that include value-focused thinking and adaptive management. The next sections discuss the Alouette River Stakeholder Committee process in terms of objectives, participation, process, methods for structuring values and creating alternatives, information sources, and results. Discussion and conclusions complete the paper.     

The development of global IT infrastructure

A research model of the impact of a multinational corporations’ (MNC) global strategic orientation on global IT infrastructure was developed using global integration, or the degree to which a global strategy is actually implemented, as a mediator. A “matched pair” survey of 94 MNCs was conducted (two respondents per firm) in order to guard against common source bias. The results showed that the firms that pursue a globally oriented strategy actually enacted these strategies as indicated by a wide-variety of resource flows across national units. The role of the level of global integration as a mediator between global strategic orientation and global IT capabilities was empirically demonstrated. This confirms that a global strategy is not sufficient to ensure that an enabling IT infrastructure will be developed; rather it is the actual level of integration and interdependence that is achieved as a result of the strategy that drives IT infrastructure. The primary areas in which global integration was found to be closely linked to the global IT infrastructure were human resources, which significantly influenced the reach, range, support services and planning of the global IT infrastructure, and information resources which significantly influenced the planning dimension of the infrastructure. These results strongly suggest that the transfer of people among national units creates an information needs “pull” which leads to the development of better IT infrastructure and that the “push” of standardized information also contributes positively.     

Does accounting regulation enhance corporate governance? Evidence from the disclosure of share-based remuneration

Accounting for stock options and share-based remuneration is a controversial issue. The purpose of this study is to explore the impact of the mandatory adoption of IFRS 2 on accounting for share-based remuneration by Italian listed companies. The requirements under this standard could have relevant implications for corporate governance as IFRS 2 is expected to reduce the information asymmetry that may exist between corporate insiders and outsiders regarding such remuneration. Empirical evidence confirms that overall disclosure in annual reports concerning the costs of remuneration plans has increased following the adoption of IFRS 2, although some cases of lack of disclosure have also been found. We find that this change in accounting regulation has contributed towards revealing the ‘true’ cost of share-based remuneration to minority shareholders and other investors, together with some evidence of creative accounting surrounding the substance over form principle.     

Assessments of Direct Human Exposure—The Approach of EU Risk Assessments Compared to Scenario-Based Risk Assessment

The awareness of potential risks emerging from the use of chemicals in all parts of daily life has increased the need for risk assessments that are able to cover a high number of exposure situations and thereby ensure the safety of workers and consumers. In the European Union (EU), the practice of risk assessments for chemicals is laid down in a Technical Guidance Document; it is designed to consider environmental and human occupational and residential exposure. Almost 70 EU risk assessment reports (RARs) have been finalized for high-production-volume chemicals during the last decade. In the present study, we analyze the assessment of occupational and consumer exposure to trichloroethylene and phthalates presented in six EU RARs. Exposure scenarios in these six RARs were compared to scenarios used in applications of the scenario-based risk assessment approach to the same set of chemicals. We find that scenarios used in the selected EU RARs to represent typical exposure situations in occupational or private use of chemicals and products do not necessarily represent worst-case conditions. This can be due to the use of outdated information on technical equipment and conditions in workplaces or omission of pathways that can cause consumer exposure. Considering the need for exposure and risk assessments under the new chemicals legislation of the EU, we suggest that a transparent process of collecting data on exposure situations and of generating representative exposure scenarios is implemented to improve the accuracy of risk assessments. Also, the data sets used to assess human exposure should be harmonized, summarized in a transparent fashion, and made accessible for all risk assessors and the public.