Research On Environmental Disclosure Based On Legitimacy Theory

Along with the accelerated process of reform and opening up, China's economic development has made great progress since the Third Plenary Session. But this material development at the expense of the environment, predatory use of natural resources at the expense of making excessive consumption of resources increased ecological damage, environmental problems continue to highlight. "Eleventh Five-Year Plan" period, China continued to increase to 4% of the population on the basis of 40% of the total economy on the growth rate of resources and environmental constraints and economic development will face greater problems, so the current environment in China situation is still grim. Enterprises as the main body in social economy, its production and business activities increasing damage to the environment, especially in recent years a series of environmental emergencies occur, causing the media continued to report, thereby strengthening the public on environmental issues. Public awareness of environmental protection promote their corporate environmental responsibility and disclosure of environmental information more attention.Through the green products they choose and the role of the stock market affect the survival, so the public demand for information on the environment of the enterprise increases the pressure for environmental disclosure. Subjected to pressure these companies to avoid the legality of the negative impact of the adverse environmental information, protect their right to survival and development, they began to disclose more environmental information to relieve the pressure of such legitimacy.Government departments also continue to promulgate regulations, strengthen supervision on the environment and constraints. Environmental Protection Administration signed a "listed company on the strengthening of environmental supervision guidance document" in 2008, requiring 13 categories of heavily polluting companies to go public before the environmental review being carried out. In the same year the Shanghai Stock Exchange has issued the "Guidelines on Environmental Information Disclosure of Listed Companies" to encourage listed companies to disclose more environmental information in its annual report. September 2010 Environmental Protection Administration issued a draft of "Guide to Environmental Information Disclosure of Listed Companies," to the community for advice. These regulations and the introduction of the draft indicate that government and industry regulatory bodies strengthen the constraints on corporate environmental responsibility, the pressure companies undergoing is increasing.Continued interest in the media, the constraints of government and strengthening public awareness of environmental protection have increased the legitimacy pressure of companies Based on legitimacy theory perspective, in order to alleviate or get rid of this pressure, the enterprise must tend to disclose more environmental information in to protect and maintain their image, so that the environmental performance of enterprises and the public's expectations are consistent to some extent. Can be said that corporate disclosure of environmental information is the tool which they use to get legitimacy. Based on legitimacy theory, this paper reviewed the present situation of environmental information disclosure and analyzed how legitimacy pressure affecting the level of disclosure using standardized and empirical research method,and put forward relevant proposals.First of all, this research introduced background, purpose and meaning, content and methods, reviewed status of environmental information disclosure in domestic and foreign.Study abroad in this area started earlier, mainly based on empirical research-based, this paper describes several representative studies about relationship between legality and environmental information disclosure. National research is mainly on status, factors and motivation. The factors they most considered are internal factors, while external pressures are less considered. In china the study on public pressure and the legality of disclosure of environmental information is less, and most to regulate the research-based. Innovation of this paper is that the legitimacy of the political economy theory is leaded into the field of environmental accounting,expanding the scope of the study in this area.Secondly, it analyzed status, problems and causes. This paper argues that the imperfect system, weak awareness of the environment and single environmental objectives of enterprise caused less voluntary disclosure and low reliability, comparability, timeliness and availability. Then,it introduces the legitimacy theory and environmental information disclosure and indicates environmental information disclosure is a tool for enterprises to obtain legitimacy. In addition this paper analyzes five characteristics of environmental information disclosure under the theory of legitimacy. They include the diversity of content and form of disclosure, emphasis on stakeholder information needs affecting on the legitimacy, emphasizing legitimacy of environmental information disclosure for the purpose, emphasizing the level of legitimacy pressure impact on information disclosure.Thirdly,we put forward several hypotheses, and 164 listed companies are randomly selected. We determine the environmental disclosure index according to its annual report for 2007-2009 using the content analysis method. Then we set up a empirical model on the relation between environmental information disclosure index and legality pressure,through descriptive statistics, correlation analysis and regression analysis, we draw three conclusions. First, overall level of environmental information disclosure is not high, but showing a rising trend year by year. Disclosure is mainly in annual report or social responsibility report, but it is simple text description lack of monetary information. Firms tend to disclose the positive and hide negative environmental information. Second, the impact of legitimacy pressure on environmental information disclosure is significant, and it is the main driver. Enterprise improved the image in front of public, media and society and meet the needs of stakeholders through environmental information disclosure.Third, ownership concentration, the proportion of tradable shares, the proportion of independent directors adopted a test of significance, while nature of equity and does not pass test. Government capital failed to fulfill more social responsibility than private capital, CEO duality is only a mere formality, the chairman have not play a supervisory role.Finally, this study proposed three policy recommendations to improve the environmental information disclosure and pointed out the limitations and future research directions. First, the departments should work together to accelerate improvement of environmental information disclosure system. Second, raise public awareness of environmental protection. Third, actively improve the corporate governance structure and strengthen the company's major business decision-making and supervision.