The relevance of national contexts for carbon disclosure decisions of stock-listed companies: a multilevel analysis

• Published in: Journal of cleaner production 2016-10, Vol.133, p.1204-1217
• Main Authors: Grauel, Jonas, Gotthardt, Daniel
• Format: Article
• Language: English
• Subjects: Carbon emissions; Climate change; Environmental regulations; Legal origin; Voluntary disclosure
• ISSN: 0959-6526; 1879-1786
• DOI: 10.1016/j.jclepro.2016.05.182

Response rates to the CDP climate change program differ strongly between different countries globally. This indicates that participation in carbon disclosure by stock-listed companies is strongly influenced by characteristics of national contexts. This article builds on ecological modernization theory and institutional theory. On this basis we examine how stringency and enforcement of environmental regulations on the one hand, and legal origins of financial systems on the other, can explain firms' participation in CDP climate change disclosure. Furthermore, it is asked whether multinational corporations are less affected by country-level characteristics. For the first time in the disclosure literature, multilevel regression analysis is used, a method that accounts for the hierarchical structure of a population of firms being embedded in national contexts. Our results show that both environmental regulations and legal origin are extremely relevant explanatory factors, accounting for more variance than all tested firm-level variables except size. Furthermore, while multinational firms do report more than domestic firms, we could not find that multinational corporations are less affected by the characteristics of their countries-of-origin. Our findings have implications for transparency-based initiatives as a governance tool for climate change mitigation, since they fit into some regulatory contexts better than others. Advances in voluntary disclosure seem most likely in emergent countries which tighten environmental regulations while liberalizing their economy. •High levels of environmental regulation incentivize voluntary carbon disclosure.•Common law fosters firms' participation in voluntary transparency initiatives.•National contexts do seem to matter for multinational and domestic firms alike.•At the firm-level, size and a multinational orientation influence disclosure most.