Corporate Environmental Disclosures and Risk Management

Posted: 17 Nov 2020

See all articles by Chune Young Chung

Chune Young Chung

Chung-Ang University - College of Business & Economics

Incheol Kim

University of Texas Rio Grande Valley (UTRGV) (Formerly University of Texas-Pan American) - College of Business and Entrepreneurship

Rong Yang

Rochester Institute of Technology

Date Written: September 30, 2020

Abstract

This study examines the risk management engagement of U.S. firms in polluting industries. Using hand-collected voluntary corporate environmental reports, we find that a firm’s total toxic chemical releases increase the intensity of its corporate environmental disclosures, as measured by their issuance frequency and length. Proactive environmental disclosures significantly decrease industry-adjusted firm systematic risk (beta), especially in highly polluting industries. This risk reduction is more evident among firms that undertake green innovations. In addition, we find that firms with more socially connected boards and female directors exhibit greater risk reductions relative to their counterparts. Overall, this study highlights the mitigating effect of corporate environmental transparency on firm risk.

Keywords: corporate environmental responsibility; environmental disclosure; firm risk; corporate governance

JEL Classification: G32; G34

Suggested Citation

Chung, Chune Young and Kim, Incheol and Yang, Rong, Corporate Environmental Disclosures and Risk Management (September 30, 2020). Available at SSRN: https://ssrn.com/abstract=3702588

Chune Young Chung

Chung-Ang University - College of Business & Economics ( email )

84 Heuk-suk Ro
Seoul
Korea, Republic of (South Korea)

Incheol Kim

University of Texas Rio Grande Valley (UTRGV) (Formerly University of Texas-Pan American) - College of Business and Entrepreneurship ( email )

1201 W University Dr
Edinburg, TX 78539
United States

Rong Yang (Contact Author)

Rochester Institute of Technology ( email )

Saunders College of Business
Rochester Institute of Technology
Rochester, NY 14623
United States

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