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Environmental and Social Disclosures and Firm Risk

Author

Listed:
  • Mohammed Benlemlih

    (University of Grenoble Alpes, CERAG, CNRS)

  • Amama Shaukat

    (University of Essex)

  • Yan Qiu

    (University of Manchester)

  • Grzegorz Trojanowski

    (University of Exeter Business School)

Abstract

We examine the link between a firm’s environmental (E) and social (S) disclosures and measures of its risk including total, systematic, and idiosyncratic risk. While we do not find any link between a firm’s E and S disclosures and its systematic risk, we find a negative and significant association between these disclosures and a firm’s total and idiosyncratic risk. These are novel findings and are consistent with the predictions of the stakeholder theory and the resource-based view of the firm suggesting that firms which make extensive and objective E and S disclosures promote corporate transparency that can help them build a positive reputation and trust with their stakeholders. This in turn can help mitigate the firms' idiosyncratic/operational risk. These findings are important for all corporate stakeholders including managers, employees, and suppliers who have a significant economic interest in the survival and success of the firm.

Suggested Citation

  • Mohammed Benlemlih & Amama Shaukat & Yan Qiu & Grzegorz Trojanowski, 2018. "Environmental and Social Disclosures and Firm Risk," Journal of Business Ethics, Springer, vol. 152(3), pages 613-626, October.
    • Handle: RePEc:kap:jbuset:v:152:y:2018:i:3:d:10.1007_s10551-016-3285-5
    DOI: 10.1007/s10551-016-3285-5
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