Explaining voluntary environmental disclosure in Brazil using panel regression analysis

Abstract

The objective of this paper is to identify the factors that explain voluntary environmental disclosure among potentially polluting Brazilian companies. To this end, an analysis was carried out of the standardized financial statements and sustainability reports covering the 2005-2007 period of the publicly traded companies listed with the São Paulo Stock Exchange (Bovespa) that belong to sectors that have a high impact upon the environment, comprising enterprises that engage in: mining metals; metallurgy; producing chemicals, pulp and paper, and leather; transportation; and running terminals, warehouses and commerce (of fuel, oil products and chemicals). In order to explain the voluntary environmental disclosure of the researched enterprises, seven hypotheses were formulated and tested using statistical analysis. These hypotheses concern the individual factors of the companies in relation to size, profitability, leverage, auditing, sustainability, internationalization and publication of sustainability reports. The results indicate that in the three-year period analyzed, the 57 companies that comprise the study's sample disclosed a total of 6,182 environmental rulings, 73% of which in their environmental reports and the other 27% in their financial statements. Panel regression analysis indicated that size, auditing firm, sustainability and the publication of the environmental report are relevant (5% significance level) to explain voluntary disclosure of environmental information. The authors concluded that the findings corroborate the positive accounting theory and partially corroborate the legitimacy theory.