Beyond organizational limits: uncovering the effect of capitalism on environmental disclosure practices

Purpose - This study aims to examine the effect of the characteristics of capitalism on environmental disclosure. Design/methodology/approach - Over a 10-year period (2009–2018), the study examined the environmental disclosure of 3,253 companies located in 16 countries. Environmental disclosure was the dependent variable and the independent variables were economic freedom index, foreign direct investment, availability of specialized training services, corruption perception index and protection of property rights. The hypotheses were tested using panel data regression with fixed effects. Findings - The findings showed that in countries with greater economic freedom, less availability of specialized services and less corruption, companies disclose more environmental information. The authors find evidence that confirms the main thesis of the varieties of capitalism approach: the behavior of firms is shaped by the relations between the state and society. Practical implications - Managers should pay greater attention to the country’s institutional issues before installing or relocating their industries, as certain national institutions support the development of valuable capacities at the company-level, such as environmental disclosure. Originality/value - This study reinforces the understanding of how national institutions can influence environmental disclosure practices, adopting new variables to represent the characteristics of capitalism. Although many previous studies have analyzed the effect of the institutional environment on environmental disclosure, it is still unclear how companies engage with environmental issues in different capitalist contexts.