Environmental and Social Disclosures and Firm Risk

Benlemlih, M., Shaukat, A., Qiu, Y., & Trojanowski, G. (2018). Environmental and social disclosures and firm risk. Journal of Business Ethics, 152(3), 613-626.

Posted: 17 Apr 2020

See all articles by Mohammed Benlemlih

Mohammed Benlemlih

Green reply Luxembourg

Amama Shaukat

Brunel Business School, Brunel University, London

Yan (Joy) Qiu

affiliation not provided to SSRN

Grzegorz Trojanowski

University of Exeter

Date Written: March 24, 2018

Abstract

We examine the link between a firm’s environmental (E) and social (S) disclosures and measures of its risk including total, systematic, and idiosyncratic risk. While we do not find any link between a firm’s E and S disclosures and its systematic risk, we find a negative and significant association between these disclosures and a firm’s total and idiosyncratic risk. These are novel findings and are consistent with the predictions of the stakeholder theory and the resource-based view of the firm suggesting that firms which make extensive and objective E and S disclosures promote corporate transparency that can help them build a positive reputation and trust with their stakeholders. This in turn can help mitigate the firms' idiosyncratic/operational risk. These findings are important for all corporate stakeholders including managers, employees, and suppliers who have a significant economic interest in the survival and success of the firm.

Keywords: Corporate Social Responsibility, ESG information, Financial risk

Suggested Citation

Benlemlih, Mohammed and Shaukat, Amama and Qiu, Yan (Joy) and Trojanowski, Grzegorz, Environmental and Social Disclosures and Firm Risk (March 24, 2018). Benlemlih, M., Shaukat, A., Qiu, Y., & Trojanowski, G. (2018). Environmental and social disclosures and firm risk. Journal of Business Ethics, 152(3), 613-626., Available at SSRN: https://ssrn.com/abstract=3560143

Mohammed Benlemlih (Contact Author)

Green reply Luxembourg ( email )

Luxembourg
Luxembourg

Amama Shaukat

Brunel Business School, Brunel University, London ( email )

Kingston Lane
Eastern Gateway Building
Uxbridge, Middlesex UB8 3PH
United Kingdom

HOME PAGE: http://www.brunel.ac.uk/people/amama-shaukat

Yan (Joy) Qiu

affiliation not provided to SSRN

Grzegorz Trojanowski

University of Exeter ( email )

Xfi Building
Rennes Drive
Exeter, Devon EX4 4ST
United Kingdom

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