[Home ] [Archive]   [ فارسی ]  
:: Main :: About :: Current Issue :: Archive :: Search :: Submit :: Contact ::
Main Menu
Home::
Journal Information::
About the Journal
Aims& Scopes
Editorial Board ::
Articles archive::
All Issues
Current Issue
Publication Ethics::
For Authors::
Guide for Authors
Submission Form
Peer Review Process::
Reviewers Section
Registration::
Registration Form
Site Facilities::
Site map
Search contents
FAQ
Top 10 contents
Inform to friends
Contact us::
Contact Information
Contact us
::
Search in website

Advanced Search
..
Receive site information
Enter your Email in the following box to receive the site news and information.
..
:: Volume 3, Issue 5 (9-2018) ::
aapc 2018, 3(5): 1-39 Back to browse issues page
Analysis of Environmental Sustainability Performance and its impact on the cost of equity in companies listed in Tehran Stock Exchange
Yahya Hassas Yeganeا 1, Jafar Babajani2 , Mohammad Taghi Taghavifard , Arash Arianpoor3
1- Full Professor, Allameh Tabataba’i University, Tehran, Iran (Corresponding author) , yahya_yeganeh@yahoo.com
2- Full Professor, Allameh Tabataba’i University, Tehran, Iran (jafar.babajani@gmail.com)
3- PhD student of accounting, Allameh Tabataba’i University, Tehran, Iran (arash.arianpoor@attar.ac.ir)
Abstract:   (7166 Views)
Following the emergence of environmental issues and corporate responsibility to environmental performance, guidelines, principles and rules for companies are developed, which companies publish their environmental reports. The main purpose of this paper is to analyze the status of environmental sustainability reporting and its relationship with the cost of equity in listed companies in Tehran Stock Exchange. In order to achieve the main objective of the research, after studying literature of research and experts’ opinion, 20 indicators were determined using Confirmatory Factor Analysis (CFA). Then, by reviewing the content of the financial statements and reports of the board of directors of 134 companies, the reporting status of these indicators was reviewed during the years 2013-2017. Also, after collecting data about 79 companies, the research hypothesis was tested using panel data.The findings show that companies have better reporting on components of "raw materials, energy and water " than other components, but the level of environmental sustainability of companies is lower than the investigated ones. Also, contrary to theoretical literature of the research, environmental sustainability performance has a positive impact on cost of equity, which can be attributed to stock price volatility and ignoring specific company characteristics (such as management ability or employee skills) or the interaction of historical and future information
Keywords: Environmental Sustainability Performance, Environmental Sustainability Performance Indicator, Environmental Sustainability Reporting Index, Cost of Equity
Full-Text [PDF 343 kb]   (2727 Downloads)    
Type of Study: Research | Subject: Special
Received: 2018/02/19 | Accepted: 2018/04/7 | Published: 2018/09/7
References
1. Abdel-Fattah, T. M. 2008. Voluntary Disclosure Practices in Emerging Capital Markets: The Case of Egypt, Durham University.
2. Amihud, Y., & H. Mendelson. 1986. Asset pricing and the bid-ask spread. Journal of financial Economics 17(2): 223-249.
3. Available at: http://digitalcommons.pepperdine.edu/jef/vol1/iss1/4
4. Bailey, W., G. A., Karolyi & C. Salva. 2006. The economic consequences of increased disclosure: Evidence from international cross-listings. Journal of Financial Economics 81(1): 175–213.
5. Barus, Sri Hernita & Sylvia Veronica, Siregar. 2014. The effect of intellectual capital disclosure on cost of capital: Evidence from technology intensive firms in Indonesia. Journal of Economics, Business, and Accountancy Ventura 17 (3): 333 – 344
6. Beedles, William L. 1991. Size, Liquidity, and the Cost of Equity. Journal of Small Business Finance 1(1): pp. 29-44.
7. Botosan, C. A. .1997. Disclosure Level and the Cost of Equity Capital. The Accounting Review 22(3): pp. 323-349.
8. Botosan, C.A. , M., Plumlee. 2002. A re-examination of disclosure level and expected cost of equity capital. J. Account. Res. 40 (1): 21–40.
9. Brockett, A., Z., Rezaee. 2013. Corporate Sustainability: Integrating Performance and Reporting. John Wiley and Sons, Inc., Hoboken, NJ.
10. Bushee, B. J., & C. F. Noe. 2000. Corporate disclosure practices, institutional investors, and stock return volatility. Journal of accounting research 38: 171-202.
11. Chen, J. C., & R. W., Roberts. 2010. Toward a more coherent understanding of the organization–society relationship: A theoretical consideration for social and environmental accounting research. Journal of Business Ethics 97: 651–665.
12. Cheng, C., D., Collins & H., Huang. 2006. Shareholder rights, financial disclosure, and the cost of equity capital. Review of Quantitative Finance and Accounting 27: 175–204.
13. Chiong, Paul Tiong Nyit. 2010. Examination Of Corporate Sustainability Disclosure Level And Its Impact On Financial Performance. PhD thesis, University of Multimedia.
14. Clarkson, P., J., Guedes & R., Thompson. 1996. On the diversification, observability, and measurement of estimation risk. Journal of Financial and Quantitative Analysis: 31(1): 69-84.
15. Clinch, G., & R. E., Verrecchia. 2015. Voluntary disclosure and the cost of capital. Australian Journal of Management 40(2): 201-223.
16. Coles, J., U., Loewenstein , J., Suay. 1995. On equilibrium pricing under parameter uncertainty. J. Financ. Quant. Anal 30: 347–364.
17. Crifo, P., , V.D., Forget, S., Teyssier. 2015. The price of environmental, social and governance practice disclosure: an experimentwith professional private equity investors. J. Corp. Finance 30: 168–194.
18. Diamond, D. W. and R. E., Verrecchia. 1991. Disclosure, Liquidity, and the Cost of Capital. The Journal of Finance 46(4): 1325-1359.
19. Dobler, Michael, Kaouthar, Lajili, Daniel, Zéghal. 2015. Corporate environmental sustainability disclosures and environmental risk: Alternative tests of socio-political theories. Journal of Accounting & Organizational Change 11(3): 301-332.
20. El Ghoul, S., O., Guedhami, H., Kim, K., Park . 2016. Corporate environmental responsibility and the cost of capital: International evidence. Journal of Business Ethics: 1-27.
21. Emshwiller, J. R. 1989. Small Stock markets May Be Right Size. The Wall Street Journal, Dow Jones and Co., New York, January 18, p. B2.
22. Ernst and Young (EY). 2016. Value of Sustainability Reporting. Available at http://www.ey.com/us/en/services/specialty-services/climate-change-and-sustainability services/value-of-sustainability-reporting
23. Francis, J., R., Lafond, P.M., Olsson, K., Schipper. 2005b. The market pricing of accruals quality. J. Account. Econ 39 (2): 295–327.
24. Francis, J.R., I.K., Khurana, R., Pereira. 2005a. Disclosure incentives and effects on cost of capital around the world. Account. Rev 80 (4): 1125–1162.
25. Frankel, R., M., McNichols, G. P., Wilson. 1995. Discretionary disclosure and external financing. Accounting Review 70(1): 135-150.
26. Gietzmann, M. B., M., Trombetta. 2003. Disclosure interactions: accounting policy choice and voluntary disclosure effects on the cost of raising outside capital. Accounting and Business Research 33(3): 187-205.
27. Global Reporting Initiative (GRI). 2015. “G4 Sustainability Reporting Guidelines.” https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and Standard-Disclosures.pdf.
28. Glosten, L., P., Milgrom. 1985. Bid ask and transaction prices in a specialist market with heterogeneously informed traders. J. Financ. Econ 14 (1), 71–100.
29. Gray, P., P.-S. Koh, and Y. H. Tong. 2009. Accruals Quality, Information Risk and Cost of Capital: Evidence from Australia. Journal of Business Finance and Accounting 36 (1 & 2): 51-72.
30. Gupta, K. 2018. Environmental sustainability and implied cost of equity: international evidence. Journal of Business Ethics, 147(2): 343-365.
31. Healy, P. M., & K. G., Palepu. 2001. Information asymmetry, corporate disclosure, and the capital markets: a review of the empirical disclosure literature. Journal of Accounting and Economics 31 (1-3): 405–440.
32. Hou, K., A.M.,Van Dijk, Y., Zhang. 2012. The implied cost of capital: a new approach. J. Account. Econ. 53 (3): 504–526.
33. International Federation of Accountants (IFAC). 2011. Sustainability Framework 2.0. Available at http://web.dev.ifac.org/sustainability-framework/imp-sustainability-performance.
34. Jo, H., M.A., Harjoto. 2011. Corporate governance and firm value: the impact of corporate social responsibility. J. Bus. Ethics 103 (3): 351-383.
35. Khan, A., M., Muttakin, J. Siddiqui. 2013. Corporate governance and corporate social responsibility disclosures: Evidence from an emerging economy. Journal of Business Ethics 114(2): 207–223.
36. Kim, O., R. E., Verrecchia. 1994. Market liquidity and volume around earnings announcements. Journal of accounting and economics: 17(1-2): 41-67.
37. Kristandl, G., N., Bontis .2007. The impact of voluntary disclosure on cost of equity capital estimates in a temporal setting. Journal of Intellectual Capital 8(4): 577-594.
38. Lakonishok, J. 1993. Is Beta Dead or Alive?. In Association for Investment Management and Research (AIMR) Conference Proceedings 1993 (6): 38-41.
39. Lambert, R., C., Leuz, R.E., Verrecchia. 2007. Accounting information, disclosure, and the cost of capital. J. Account. Res. 45 (2): 385–420.
40. Lang, M. H., R. J., Lundholm. 2000. Voluntary disclosure and equity offerings: reducing information asymmetry or hyping the stock?. Contemporary accounting research 17(4): 623-662.
41. Lang, M., K. V., Lins, M., Maffett. 2012. Transparency, liquidity, and valuation: International evidence on when transparency matters most. Journal of Accounting Research 50(3): 729-774.
42. Leuz, C., P.D., Wysocki. 2008. Economic consequences of financial reporting and disclosure regulation: a review and suggestions for future research. Working paper, University of Chicago and University of Miami (Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1105398).
43. Leuz, C., R.E.,Verrecchia. 2005. Firms' capital allocation choices, information quality, and the cost of capital. Information Quality, and the Cost of Capital. SSRN Electronic Journal. DOI: 10.2139/ssrn.495363
44. Li, Y., D. J., Stokes, S. L., Taylor, L., Wong. 2009. Audit quality, accounting attributes and the cost of equity capital. SSRN Electronic Journal. DOI: 10.2139/ssrn.1481823
45. Li, Y., D., Stokes. 2008. Audit Quality and Cost of Equity Capital. 2nd Workshop of Audit Quality, EIASM.
46. Li,W.X., C.C.S., Chen, J.J., French. 2012. The relationship between liquidity, corporate governance, and firm valuation: evidence from Russia. Emerg. Mark. Rev. 13 (4): 465-477.
47. Liu, J., D., Nissam, J.,Thomas. 2002. Equity valuation using multiples. J. Account. Res. 40 (1): 135–172.
48. Liu, M., P., Wysocki. 2008. Operating Risk, Information Risk, and Cost of Capital. Working paper, Pennsylvania State University and MIT.
49. Lyandres, E., M.,Watanabe. 2012. Product market competition and equity returns. SSRN Electronic Journal.DOI: 10.2139/ssrn.1536406
50. Ma, M. S. 2013. Industry Peer Firm Earnings Quality and the Cost of Equity. Working paper, Steed School of Accounting , The University of Oklahoma Norman, Oklahoma, USA.
51. Ma, M. S. 2014. Peer Firm Earnings Quality and the Cost of Equity. A DISSERTATION SUBMITTED TO THE GRADUATE FACULTY in partial fulfillment of the requirement for the Degree of DOCTOR OF PHILOSOPHY, The University of Oklahoma Norman, Oklahoma, USA.
52. Martinez-Ferrero, J., S., Baberjee, I. M., Garcia-Sanchez. 2016. Corporate social responsibility as a strategic shield against costs of earnings management practices. Journal of Business Ethics, 133 (2): 305–324.
53. Ministry of the Environment (Japan Government). 2012. Environmental Reporting Guidelines. https://www.env.go.jp/en/policy/economy/erg2012.pdf
54. Moss, Supawadee Sukeecheep .2016. The Impact of Corporate Governance and Earnings Management Practices on Cost of Equity Capital: Evidence from Thai Listed Companies. ACRN Oxford Journal of Finance and Risk Perspectives 5(1): 160-182.
55. Nekhili, M., , H., Nagati, T., Chtioui, , C., Rebolledo. 2017. Corporate social responsibility disclosure and market value: Family versus nonfamily firms. Journal of Business Research 77: 41–52
56. Ng, C., A. & Z., Rezaee. 2012. Sustainability Disclosures and Cost of Capital. SSRN Electronic Journal. DOI: 10.2139/ssrn.2038654
57. Ng, C., A. & Z., Rezaee. 2015. Business sustainability performance and cost of equity capital. Journal of Corporate Finance 34: 128–149.
58. Nikolaev, V., L.,Van Lent. 2005. The endogeneity bias in the relation between cost-of-debt capital and corporate disclosure policy. European Accounting Review 14 (4): 677-724.
59. Opler, T.C., S.,Titman. 1994. Financial distress and corporate performance. J. Financ. 49 (3): 1015-1040.
60. Prodhan, B. K., M. C., Harris. 1989. Systematic risk and the discretionary disclosure of geographical segments: an empirical investigation of US multinationals. Journal of Business Finance & Accounting:16(4): 467-485.
61. Ramly, Zulkufly .2012. Impact of corporate governance quality on the cost of equity capital in an emerging market: Evidence from Malaysian listed firms. African Journal of Business Management 6(4):1733-1748.
62. Rezaee, Z. 2016. Business sustainability research: A theoretical and integrated perspective. Journal of Accounting Literature 36: 48–64
63. Rezaee, Z. 2017. Corporate Sustainability: Theoretical and Integrated Strategic Imperative and Pragmatic Approach. Journal of Business Inquiry: Research, Education & Application, 16(1): 30-87.
64. Rezaee, Z., L., Tuo. 2017a. Are the Quantity and Quality of Sustainability Disclosures Associated with the Innate and Discretionary Earnings Quality?. Journal of Business Ethics, 1-24. DOI 10.1007/s10551-017-3546-y
65. Rezaee, Z., L., Tuo. 2017b. Voluntary disclosure of non-financial information and its association with sustainability performance. Advances in Accounting 39: 47-59.
66. Semper, Cabedo, D., Tirado, J. M., Beltrán. 2014. Risk disclosure and cost of equity. The Spanish case. Contaduría y Administración, 59(4): 105-135.
67. Smith, J., A., Adhikari, R. Tondkar. 2005. Exploring differences in social disclosures internationally: A stakeholder perspective. Journal of Accounting and Public Policy 24(2): 123–151.
68. Stevens, J. 2002. Applied Multivariate Statistics for the Social Sciences (4th Edition). Mahwah, NJ: Lawrence Erlbaum Associates.
69. Thompson, Paul. 2014. Monitoring and Benchmarking Key Performance Indicators: Part One. Global Knowledge Gateway, Practice Management, July 21. Available: https://www.ifac.org/global-knowledge-gateway/practice-management/discussion/monitoring-and-benchmarking-key-performanc-0
70. Verrecchia, R. E. 2001. Essays on disclosure. Journal of accounting and economics 32(1): 97-180.
71. Wang, Z., J., Sarkis. 2017. Corporate social responsibility governance, outcomes, and financial Performance. Journal of Cleaner Production 162:1607-1616
72. Windle PE. 2004. Delphi technique: assessing component needs. J Perianesth Nurs 19(1): 46-7.
73. Wong, L. 2009. The Pricing of Earnings Quality in Australia. A thesis submitted for the degree of Doctor of Philosophy University of New South Wales School of Accounting, Australian School of Business.
Add your comments about this article
Your username or Email:

CAPTCHA

XML   Persian Abstract   Print

Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Hassas Yeganeا Y, Babajani J, Taghi Taghavifard M, Arianpoor A. Analysis of Environmental Sustainability Performance and its impact on the cost of equity in companies listed in Tehran Stock Exchange . aapc 2018; 3 (5) :1-39
URL: http://aapc.khu.ac.ir/article-1-485-en.html
Rights and permissions
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Volume 3, Issue 5 (9-2018) Back to browse issues page
دوفصلنامه علمی حسابداری ارزشی و رفتاری journal of Value & Behavioral Accounting
Persian site map - English site map - Created in 0.09 seconds with 37 queries by YEKTAWEB 4666