Are Shareholders Prepared to Pay for Additional Financial, Social and Environmental Disclosure? A Choice-Based Experiment

49 Pages Posted: 21 Jun 2021

See all articles by Charl de Villiers

Charl de Villiers

University of Auckland Business School

Charles H. Cho

York University - Schulich School of Business

Michael J. Turner

University of Queensland - Business School

Riccardo Scarpa

University of Waikato - Management School

Date Written: 2021

Abstract

This study investigates whether shareholders are willing to pay for higher levels of corporate financial, social, and environmental disclosure. We conduct a choice-based conjoint experiment wherein 65 shareholders are asked to make 12 choices, choosing each time between two predetermined randomized combinations of different levels of investment returns, financial disclosure, environmental disclosure, and social disclosure. Results indicate that whereas shareholders are willing to pay for financial disclosure and environmental disclosure, they are unwilling to pay for social disclosure. Hence, the latter finding does not provide conclusive evidence on the overall question. However, the result that investors are willing to pay for non-financial disclosures - such as environmental information - constitutes our main contribution as prior research has not been able to provide strong evidence that investors are willing to forfeit investment returns in order to gain access to more corporate disclosures. The use of a choice-based conjoint experiment to examine these matters is novel and potentially opens avenues for future research. We believe our theoretical and practical contributions to be of interest to various stakeholders, including firms in making decisions about disclosure levels and regulators in assessing the need for financial disclosure regulation.

Keywords: choice-based conjoint; environmental disclosure, financial disclosure, social disclosure, non-financial disclosure, willingness to pay

Suggested Citation

de Villiers, Charl and Cho, Charles H. and Turner, Michael J. and Scarpa, Riccardo, Are Shareholders Prepared to Pay for Additional Financial, Social and Environmental Disclosure? A Choice-Based Experiment (2021). European Accounting Review, forthcoming, The University of Auckland Business School Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3866273

Charl De Villiers (Contact Author)

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

Charles H. Cho

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://schulich.yorku.ca/faculty/charles-cho

Michael J. Turner

University of Queensland - Business School ( email )

St Lucia
Australia

Riccardo Scarpa

University of Waikato - Management School

Hamilton
New Zealand

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