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Do environmental responsibility views influence investors’ use of environmental performance and assurance information?

Do environmental responsibility views influence investors’ use of environmental performance and... The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return).Design/methodology/approachNonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study.FindingsEnvironmental performance and assurance information had a greater influence on the investment judgments of investors with strong environmental responsibility views. In contrast, participants’ environmental performance return views did not moderate the influence of environmental performance and assurance information on their judgments. Supplemental analysis indicates that these contrasting results are due to the fact that the two investor views have differing influences on the relative importance that investors place on financial vs environmental performance information.Research limitations/implicationsThis study presented participants with summarized financial and environmental performance information to maintain scale compatibility between financial and environmental measures. However, the information was presented in a format similar to those used by online brokerages.Practical implicationsThis study suggests that financial statement preparers should consider investors’ views regarding the importance and value of environmental performance information when making decisions to disclose and obtain assurance on this information.Social implicationsStandard setters should consider individual differences among investors when developing guidance regarding the disclosure and assurance of environmental performance information.Originality/valueThere is limited prior research which examines how investors’ views of the importance of environmental performance information may influence investment judgments. This research indicates that the strength of investors’ environmental responsibility importance moderates the previously reported influence of environmental performance and assurance information on investment judgments. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Sustainability Accounting, Management and Policy Journal Emerald Publishing

Do environmental responsibility views influence investors’ use of environmental performance and assurance information?

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2040-8021
DOI
10.1108/sampj-12-2018-0357
Publisher site
See Article on Publisher Site

Abstract

The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return).Design/methodology/approachNonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study.FindingsEnvironmental performance and assurance information had a greater influence on the investment judgments of investors with strong environmental responsibility views. In contrast, participants’ environmental performance return views did not moderate the influence of environmental performance and assurance information on their judgments. Supplemental analysis indicates that these contrasting results are due to the fact that the two investor views have differing influences on the relative importance that investors place on financial vs environmental performance information.Research limitations/implicationsThis study presented participants with summarized financial and environmental performance information to maintain scale compatibility between financial and environmental measures. However, the information was presented in a format similar to those used by online brokerages.Practical implicationsThis study suggests that financial statement preparers should consider investors’ views regarding the importance and value of environmental performance information when making decisions to disclose and obtain assurance on this information.Social implicationsStandard setters should consider individual differences among investors when developing guidance regarding the disclosure and assurance of environmental performance information.Originality/valueThere is limited prior research which examines how investors’ views of the importance of environmental performance information may influence investment judgments. This research indicates that the strength of investors’ environmental responsibility importance moderates the previously reported influence of environmental performance and assurance information on investment judgments.

Journal

Sustainability Accounting, Management and Policy Journal – Emerald Publishing

Published: Jul 9, 2019

Keywords: Environmental disclosure; Information credibility; Environmental performance assurance; Investor corporate social responsibility views; Investor judgements

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