| Some studies suggest that increased levels of environmental disclosures in corporate annual reports may be the result of regulatory effects, while others suggest that these disclosures may be linked to efforts to legitimize corporate actions and the development of a positive corporate image. Regardless of the motive, these disclosures may affect the perceptions of an enterprise's earnings and cash flows. The objective of this study is to examine environmental disclosure practices for firms in four industries using content analysis. Specifically, the study investigates the evolutionary changes in environmental disclosure practices subsequent to the 1989 Alaskan Exxon Valdez Oil Spill.;Environmental disclosure data are obtained for 53 firms using an electronic search of corporate annual reports for years 1988 to 1990. The study uses two methods of enumeration, a quantity assessment and a quality assessment. The use of two measures is unique to this study. The first objective of the study is to determine if there are positive differences from year 1988 to 1989, and year 1989 to 1990. The overall findings suggest significant positive differences in the level of environmental disclosures for both periods using both measures.;The second objective of the study is to use a determinant model to determine whether the changes in the level of disclosure for the study period are related to firm size, industry membership, and other variables to test for a legitimacy theory effect. The overall findings for changes in 1989 suggest that size and industry membership are significant in explaining the changes in the level of disclosures. These findings lend support to the legitimacy theory argument. For 1990, the determinant model has no explanatory power. This seems to support the political economy perspective that environmental disclosures are time or event specific and are made in the firm's self-interest. Also, a more comprehensive quality measure as used here provides better information over a simple quantity measure in content analysis studies of this type. |
