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The Disclosure of Environmental Capital Expenditures: Evidence from the Electric Utility Sector in the USA
Author(s) -
SilvaGao Lucia
Publication year - 2011
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.277
Subject(s) - capital expenditure , business , competitor analysis , voluntary disclosure , sample (material) , capital (architecture) , greenhouse gas , electric utility , accounting , monetary economics , economics , finance , public economics , marketing , ecology , chemistry , archaeology , chromatography , biology , history
This research provides evidence that companies may disclose environmental capital expenditures to inform investors of a proactive environmental strategy. For a sample of electric utilities in the USA, the results show that companies with lower rates of emissions of three greenhouse gases are more likely to report amounts of environmental capital expenditure. These companies also have higher overall capital spending intensity and better financial performance. Therefore, the results support voluntary disclosure theory arguments, rather than legitimacy theory arguments. Firms with superior performance may disclose environmental capital spending to send a strong signal to investors of commitment to improvement of environmental performance and to differentiate themselves from competitors. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.