Carbon Embedded Governance: Effects on Disclosure and Performance

Posted: 2 Jan 2018

See all articles by Binh Bui

Binh Bui

Victoria University of Wellington

Noor Houqe

School of Accountancy

Mahbub Zaman

Hull University Business School

Date Written: December 24, 2017


Although prior research has examined corporate governance, few studies explicitly examine governance dedicated to sustainability issues. This paper examines (i) the combined impact of different carbon-embedded governance mechanisms (CGM) on carbon disclosure and (ii) the effect of CGM on the carbon performance-disclosure relationship. Using 361 observations from S&P500 firms from 2013 to 2015, we find CGM increase the alignment between carbon performance and carbon disclosure. Strong climate governance reduces over-acclaiming of good performance via extensive disclosure and low-polluters disclose more to differentiate themselves. Our findings highlight the importance of the frequency of reporting to boards, and of both monetary and non-monetary incentive schemes for improving carbon performance and disclosure. Overall, the results suggest that, in contrast to traditional governance structures (such as board independence, size, and diversity), CGM better reflect firms’ commitment to addressing sustainability issues and providing more transparent reporting and accountability to stakeholders.

Keywords: carbon governance; climate change; performance; disclosure; sustainability

Suggested Citation

Bui, Binh and Houqe, Muhammad Nurul and Zaman, Mahbub, Carbon Embedded Governance: Effects on Disclosure and Performance (December 24, 2017). Available at SSRN:

Binh Bui

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand
+64 4 463 5076 (Fax)


Muhammad Nurul Houqe

School of Accountancy ( email )

New Zealand

Mahbub Zaman (Contact Author)

Hull University Business School ( email )

Hull, HU6 7RX
United Kingdom


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