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Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: new insights.

Hassan, Omaima A.G.; Romilly, Peter

Authors

Omaima A.G. Hassan

Peter Romilly



Abstract

This study examines the associations and causations between corporate economic performance, environmental disclosure and greenhouse gas emissions, utilising a large, longitudinal, multi-country dataset disaggregated between developed and developing countries. The methodology employs a simultaneous equation model with system estimation to deal with endogeneity between the variables, and Granger causality tests to indicate their direction of causation. A robust result is that lower emissions are strongly associated with better economic performance. After pretesting for stationarity, we find evidence of a one-way causation from emissions and environmental disclosure to economic performance, but no evidence of reverse causation. We also find strong evidence of a one-way causation from emissions to disclosure, but no evidence of reverse causation. The over-arching policy implication is that environmental performance, as measured by greenhouse gas emissions, plays a crucial role in the formulation of business strategy at firm level and government environmental policy at national and international levels.

Journal Article Type Article
Publication Date Nov 30, 2018
Journal Business strategy and the environment
Print ISSN 0964-4733
Electronic ISSN 1099-0836
Publisher Wiley Open Access
Peer Reviewed Peer Reviewed
Volume 27
Issue 7
Pages 893-909
Institution Citation HASSAN, O.A.G. and ROMILLY, P. 2018. Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: new insights. Business strategy and the environment [online], 27(7), pages 893-909. Available from: https://doi.org/10.1002/bse.2040
DOI https://doi.org/10.1002/bse.2040
Keywords Economic; Environmental; Performance; Disclosure; Greenhouse gases; Environmental policy

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