Voluntary disclosure of greenhouse gas emissions, corporate governance and earnings management: Australian evidence

PhD Thesis


Velayutham, Eswaran. 2014. Voluntary disclosure of greenhouse gas emissions, corporate governance and earnings management: Australian evidence. PhD Thesis Doctor of Philosophy. University of Southern Queensland.
Title

Voluntary disclosure of greenhouse gas emissions, corporate governance and earnings management: Australian evidence

TypePhD Thesis
Authors
AuthorVelayutham, Eswaran
SupervisorKrishnamurti, Professor Chandra
Institution of OriginUniversity of Southern Queensland
Qualification NameDoctor of Philosophy
Number of Pages218
Year2014
Abstract

This study examines the impact of corporate governance mechanisms on greenhouse gas emission disclosure and the extent to which the disclosure of greenhouse gas emission information is associated with earnings management and the liquidity of firms’ shares. The sample for this study is drawn from Australian publicly listed firms that voluntarily disclosed their greenhouse gas emission information through voluntary disclosure channels such as the Carbon Disclosure Project, annual reports, standalone sustainability reports, and corporate websites between 2006 and 2009. This study adopts the Carbon Disclosure Project 2010 scoring methodology to measure the quality of greenhouse gas emission disclosure. A content analysis was used to score the quality of voluntary disclosures in annual financial and sustainability reports, and the information provided on company websites.

In this thesis, two competing views: the stakeholder value maximisation view and the shareholder expense view are examined in relation to the impact of corporate governance mechanisms on greenhouse gas emission disclosures and the extent to which the disclosure of greenhouse gas emission information is associated with earnings management. The stakeholder value maximisation view predicts that firms engage in socially responsible initiatives such as greenhouse emission reduction strategies and targets associated with climate change to fulfil the legitimate interests of stakeholders. On the other hand, the shareholder expense view suggests that firms engage in socially responsible initiatives such as greenhouse gas emission reduction initiatives at the expense of shareholders.

This research contributes several new findings to the literature. Firstly, with regards to the relationship between corporate governance mechanisms and voluntary disclosure, this thesis has found that effective corporate governance mechanisms such as greater board independence, the absence of Chief Executive Officer duality, the presence of board gender diversity, decrease in directors’ share ownership, increase in institutional ownership and smaller size of the audit committee drive voluntary greenhouse gas emission disclosure. These results suggest that firms with effective corporate governance mechanisms focus on the legitimate interests of a broader group of stakeholders with regards to climate change, particularly greenhouse gas emission mitigation targets. This is consistent with the stakeholder value maximisation view of firms which is based on stakeholder theory and legitimacy theory as opposed to the shareholder expense hypothesis which is based on agency theory. These results are robust to control for self-selection using the Heckman two-stage sample selection procedure. Our results are also robust to the exclusion of financial sector firms which arguably could be affected by the Global Financial Crisis.

Secondly, this research finds a weak negative relationship between voluntary disclosure of greenhouse gas emission disclosure and earnings management. This study has found only weak support for the stakeholder value maximisation view, suggesting that stakeholder-focused firms are less likely to engage in earnings management. In addition, Australian firms are trying to maintain a balance between the quality of greenhouse gas emission disclosure and the quality of financial reporting. As a result, they have difficulty satisfying multiple objectives simultaneously. These results are robust for endogeneity controls using the two-stage least squares method.

Thirdly, this study has found that the voluntary disclosure of greenhouse gas emission information by firms has an impact on the liquidity of that firm’s shares. This suggests that firms that disclose more greenhouse gas emission information voluntarily experience improved liquidity of their shares. These results support the view of Balakrishnan et al. (2013) that managers’ decisions to disclose more voluntary information could directly affect the liquidity of their firms’ shares. Managers may shape the liquidity of their firms’ shares by providing more greenhouse gas emission information voluntarily through the Carbon Disclosure Project and their corporate reporting channels.

Finally, larger and more visible firms tend to provide more information regarding climate change related due to social pressures. Firms with higher growth opportunities tend to provide less greenhouse gas emission information. Firm leverage and age are positively associated with the quality of greenhouse gas emission disclosure; indicating that longer-established firms with more leverage may disclose more the quality of greenhouse gas emissions in order to maintain their reputation among the stakeholders.

Keywordsdisclosure, greenhouse, gas, emissions, corporate, governance, earnings, management, evidence, Australian,
ANZSRC Field of Research 2020410499. Environmental management not elsewhere classified
Byline AffiliationsSchool of Commerce
Permalink -

https://research.usq.edu.au/item/q31v9/voluntary-disclosure-of-greenhouse-gas-emissions-corporate-governance-and-earnings-management-australian-evidence

Download files


Published Version
Velayutham_whole_2015.pdf
File access level: Anyone

  • 2122
    total views
  • 1022
    total downloads
  • 18
    views this month
  • 10
    downloads this month

Export as

Related outputs

Does Clean Energy Reduce Environmental Pollution under the Environmental Kuznets Curve Hypothesis in Sri Lanka?
Velayutham, Eswaran. 2023. "Does Clean Energy Reduce Environmental Pollution under the Environmental Kuznets Curve Hypothesis in Sri Lanka?" Sustainability. 15 (14). https://doi.org/10.3390/su151410983
Are environmental damage and export concentration the major threats for the long-run economic growth in Bangladesh?
Rahman, Mohammad Mafizur, Velayutham, Eswaran and Kashem, Mohammad Abul. 2023. "Are environmental damage and export concentration the major threats for the long-run economic growth in Bangladesh? " PLoS One. 18 (4), pp. 1-18. https://doi.org/https://doi.org/10.1371/journal.pone.0284620
Impact of ICTs on Innovation and Performance of Firms: Do Start-ups, Regional Proximity and Skills Matter?
Alam, Khorshed, Ali, Mohammad Afshar, Erdiaw-Kwasie, Michael, Shahiduzzaman, Md, Velayutham, Eswaran, Murray, Peter A. and Wiesner, Retha. 2022. "Impact of ICTs on Innovation and Performance of Firms: Do Start-ups, Regional Proximity and Skills Matter?" Sustainability. 14 (10), pp. 1-18. https://doi.org/10.3390/su14105801
Does tourism contribute towards zero-carbon in Australia? Evidence from ARDL modelling approach
Khanal, Avishek, Rahman, Mohammad Mafizur, Khanam, Rasheda and Velayutham, Eswaran. 2022. "Does tourism contribute towards zero-carbon in Australia? Evidence from ARDL modelling approach." Energy Strategy Reviews. 43, pp. 1-12. https://doi.org/10.1016/j.esr.2022.100907
The role of tourism in service sector employment: Do market capital, financial development and trade also play a role?
Khanal, Avishek, Rahman, Mohammad Mafizur, Khanam, Rasheda and Velayutham, Eswaran. 2022. "The role of tourism in service sector employment: Do market capital, financial development and trade also play a role?" PLoS One. 17 (8), pp. 1-18. https://doi.org/10.1371/journal.pone.0270772
Reduction of CO2 emissions: the role of renewable energy, technological innovation and export quality
Rahman, Mohammad Mafizur, Alam, Khosrul and Velayutham, Eswaran. 2022. "Reduction of CO2 emissions: the role of renewable energy, technological innovation and export quality." Energy Reports. 8, pp. 2793-2805. https://doi.org/10.1016/j.egyr.2022.01.200
Exploring the Impact of Air Transport on Economic Growth: New Evidence from Australia
Khanal, Avishek, Rahman, Mohammad Mafizur, Khanam, Rasheda and Velayutham, Eswaran. 2022. "Exploring the Impact of Air Transport on Economic Growth: New Evidence from Australia." Sustainability. 14 (18), pp. 1-17. https://doi.org/10.3390/su141811351
Economic policy uncertainty and acquisition performance: Australian evidence
Shams, Syed, Gunaskerage, Abey and Velayutham, Eswaran. 2022. "Economic policy uncertainty and acquisition performance: Australian evidence." International Review of Economics and Finance. 78, pp. 286-308. https://doi.org/10.1016/j.iref.2021.12.004
Renewable energy, energy intensity and carbon reduction: Experience of large emerging economies
Rahman, Mohammad Mafizur, Sultana, Nahid and Velayutham, Eswaran. 2022. "Renewable energy, energy intensity and carbon reduction: Experience of large emerging economies." Renewable Energy. 184, pp. 252-265. https://doi.org/10.1016/j.renene.2021.11.068
Corporate social responsibility, business group affiliation and shareholder wealth: evidence from an emerging market
Velayutham, Eswaran and Ratnam, Vijayakumaran. 2022. "Corporate social responsibility, business group affiliation and shareholder wealth: evidence from an emerging market." Social Responsibility Journal. 18 (4), pp. 723-743. https://doi.org/10.1108/SRJ-08-2020-0337
Socioeconomic inequalities in teenage pregnancy in Nigeria: evidence from Demographic Health Survey
Okoli, Chijioke Ifeanyi, Hajizadeh, Mohammad, Rahman, Mohammad Mafizur, Velayutham, Eswaran and Khanam, Rasheda. 2022. "Socioeconomic inequalities in teenage pregnancy in Nigeria: evidence from Demographic Health Survey." BMC Public Health. 22, pp. 1-11. https://doi.org/10.1186/s12889-022-14146-0
Corruption risk and stock market effects: evidence from the defence industry
Krishnamurti, Chandrasekhar, Pensiero, Domenico and Velayutham, Eswaran. 2021. "Corruption risk and stock market effects: evidence from the defence industry." Pacific-Basin Finance Journal. 70, pp. 1-19. https://doi.org/10.1016/j.pacfin.2021.101681
Are tourism and energy consumption linked? Evidence from Australia
Khanal, Avishek, Rahman, Mohammad Mafizur, Khanam, Rasheda and Velayutham, Eswaran. 2021. "Are tourism and energy consumption linked? Evidence from Australia." Sustainability. 13 (19), pp. 1-21. https://doi.org/10.3390/su131910800
Is industrial pollution detrimental to public health? Evidence from the world’s most industrialised countries
Rahman, Mohammad Mafizur, Alam, Khosrul and Velayutham, Eswaran. 2021. "Is industrial pollution detrimental to public health? Evidence from the world’s most industrialised countries." BMC Public Health. 21, pp. 1-11. https://doi.org/10.1186/s12889-021-11217-6
Sustainability disclosure and earnings management
Velayutham, Eswaran. 2018. "Sustainability disclosure and earnings management." Boubaker, Sabri, Cumming, Douglas and Nguyen, Duc Khuong (ed.) Research Handbook of Finance and Sustainability. Cheltenham, United Kingdom. Edward Elgar Publishing. pp. 532-549
Renewable and non-renewable energy consumption-economic growth nexus: new evidence from South Asia
Rahman, Mohammad Mafizur and Velayutham, Eswaran. 2020. "Renewable and non-renewable energy consumption-economic growth nexus: new evidence from South Asia." Renewable Energy. 147 (Part 1), pp. 399-408. https://doi.org/10.1016/j.renene.2019.09.007
Drivers of corruption risk and stock market effects: evidence from the defence industry
Pensiero, Domenico, Velayutham, Eswaran and Krishnamurti, Chandrasekhar. 2017. "Drivers of corruption risk and stock market effects: evidence from the defence industry." 8th Conference on Financial Markets and Corporate Governance (FMCG)2017. Wellington, New Zealand 19 - 21 Apr 2017 United States. https://doi.org/10.2139/ssrn.2903053
Socially responsible firms and mergers and acquisitions performance: Australian evidence
Krishnamurti, Chandrasekhar, Shams, Syed, Pensiero, Domenico and Velayutham, Eswaran. 2019. "Socially responsible firms and mergers and acquisitions performance: Australian evidence." Pacific-Basin Finance Journal. 57, pp. 1-16. https://doi.org/10.1016/j.pacfin.2019.101193
The issuance of warrants in rights offerings: agency costs and signaling effects
Balachandran, Balasingham, Kanapathippillai, Sutharson, Krishnamurti, Chandrasekhar, Theobald, Michael and Velayutham, Eswaran. 2017. "The issuance of warrants in rights offerings: agency costs and signaling effects." Australian Journal of Management. 42 (4), pp. 608-636. https://doi.org/10.1177/0312896216682062
The influence of board committee structures on voluntary disclosure of greenhouse gas emissions: Australian evidence
Krishnamurti, Chandrasekhar and Velayutham, Eswaran. 2018. "The influence of board committee structures on voluntary disclosure of greenhouse gas emissions: Australian evidence." Pacific-Basin Finance Journal. 50 (S1), pp. 65-81. https://doi.org/10.1016/j.pacfin.2017.09.003
Corporate social responsibility and corruption risk: a global perspective
Krishnamurti, Chandrasekhar, Shams, Syed and Velayutham, Eswaran. 2018. "Corporate social responsibility and corruption risk: a global perspective." Journal of Contemporary Accounting and Economics. 14 (1), pp. 1-21. https://doi.org/10.1016/j.jcae.2018.02.002
Determinants of defence industry corruption risk: firm level empirical evidence using transparency international‘s anti-corruption index
Krishnamurti, Chandrasekhar, Pensiero, Domenico and Velayutham, Eswaran. 2019. "Determinants of defence industry corruption risk: firm level empirical evidence using transparency international‘s anti-corruption index." Singapore Economic Review. 64 (3), pp. 675-708. https://doi.org/10.1142/S0217590816500053
Why do Australian firms issue standalone warrants?
Balachandran, Balasingham, Kanapathipillai, Sutharson, Krishnamurti, Chandrasekhar, Theobald, Michael and Velayutham, Eswaran. 2009. "Why do Australian firms issue standalone warrants?" Balachandran, Balasingham (ed.) Inaugural Finance and Corporate Governance Conference (FCGC 2010). Melbourne, Australia 07 - 09 Apr 2010 Melbourne, Australia.
Issuance of warrants in seasoned equity offerings: evidence from rights offerings
Balachandran, Balasingham, Kanapathipillai, Sutharson, Krishnamurti, Chandrasekhar, Theobald, Michael and Velayutham, Eswaran. 2010. "Issuance of warrants in seasoned equity offerings: evidence from rights offerings." Balachandran, Balasingham (ed.) Inaugural Finance and Corporate Governance Conference (FCGC 2010). Melbourne, Australia 07 - 09 Apr 2010 Melbourne, Australia.