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Mandatory environmental disclosures in a legitimacy theory context

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  • Janet Luft Mobus

Abstract

Purpose - The purpose of this study is to examine the relationship between mandatory environmental performance disclosure and subsequent environmental regulatory performance. Design/methodology/approach - Using legitimacy theory as the interpretive lens, regulatory non‐compliance disclosures threaten organizational legitimacy and non‐compliant firms are expected to respond to these threats. The potential effectiveness of different legitimation strategies for reducing these threats is evaluated. Findings - Regression analysis shows a negative correlation between the mandatory disclosure of environmental legal sanctions and subsequent regulatory violations using firms in the US oil refining industry. These results are interpreted as demonstrating that subsequent regulatory compliance is a tactic employed by managers to minimize the delegitimizing effect of organizational impropriety revealed by mandatory accounting disclosures. Practical implications - Implications for practice include linking financial reporting to environmental performance. This link gains greater importance as concern about the environmental effects of business operations becomes more acute within the investor, regulatory, and public interest arenas. Originality/value - The paper makes original contributions to research on mandatory environmental disclosures that are embedded in US financial reporting. In addition, a conception of legitimacy theory that is broader than previously relied upon in accounting research literature is reviewed. The study examines a single industry within a single country. Further research may determine whether similar relationships are observed in other industries, and whether equivalent relationships can be examined in international settings. In addition, the possibilities and limits of regulatory compliance as a measure of environmental performance, and of environmental accounting as a policy tool in the governance of the commons are discussed.

Suggested Citation

  • Janet Luft Mobus, 2005. "Mandatory environmental disclosures in a legitimacy theory context," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 18(4), pages 492-517, August.
  • Handle: RePEc:eme:aaajpp:09513570510609333
    DOI: 10.1108/09513570510609333
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    Citations

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    Cited by:

    1. Li, Yi-Na & Li, Yan & Chen, Haipeng (Allan) & Wei, Jiuchang, 2023. "How verbal and non-verbal cues in a CEO apology for a corporate crisis affect a firm’s social disapproval," Journal of Business Research, Elsevier, vol. 167(C).
    2. Fitra Dharma & Maran Marimutu & Liza Alvia, 2024. "Profitability and Market Value Effect on Carbon Emission Disclosures: The Moderating Role of Environmental Performance," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 463-472, May.
    3. Naima Lassoued & Imen Khanchel, 2023. "Voluntary CSR disclosure and CEO narcissism: the moderating role of CEO duality and board gender diversity," Review of Managerial Science, Springer, vol. 17(3), pages 1075-1123, April.
    4. Hyunjung Ji & Nicole Darnall, 2022. "How do external conditions affect the design of local governments' sustainability strategies?," Regulation & Governance, John Wiley & Sons, vol. 16(3), pages 910-929, July.
    5. Dong Ding & Bin Liu & Millicent Chang, 2023. "Carbon Emissions and TCFD Aligned Climate-Related Information Disclosures," Journal of Business Ethics, Springer, vol. 182(4), pages 967-1001, February.
    6. Talha Gezgin & Gökhan Özer & Abdullah Kürşat Merter & Yavuz Selim Balcıoğlu, 2024. "The Mediating Role of Corporate Governance in the Relationship between Net Profit and Equity and Voluntary Disclosure in the Context of Legitimacy Theory," Sustainability, MDPI, vol. 16(10), pages 1-19, May.
    7. Paula Danyelle Berrêdo & Odilanei Morais dos Santos & Hafez Abdo & Marcelo Álvaro da Silva Macedo & Luciano Dias Losekann, 2024. "Energy transition: Assessing oil companies' compliance with their disclosed environmental strategic positioning," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3517-3534, July.
    8. Shinu Vig, 2024. "Environmental disclosures by Indian companies: role of board characteristics and board effectiveness," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(1), pages 16-31, March.
    9. Dr Nwufo Christopher Ifeanyichukwu & Dr. Ibrahim, Kamaludeen F.A & Etibensi, Jackson Edet, 2024. "Corporate Eco-Efficiency and Performance of Oil and Gas Companies in Nigeria: An Empirical Examination," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 2176-2192, March.

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