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Application of Stakeholder Theory to the Quantity and Quality of Australian Voluntary Corporate Environmental Disclosures

42 Pages Posted: 28 Oct 2003  

Pamela Kent

University of Queensland - Business School

Christopher Chan

Cisco Systems; University of Queensland


This study provides a comprehensive, integrated theory for explaining social responsibility disclosures. The relevant theory applied is Ullmann's (1985) three dimensional model of social responsibility disclosure. The research question asked is: Can Ullmann's stakeholder theory be operationalized to help explain the quantity and quality of environmental disclosures in annual reports in a voluntary reporting setting? Quantity is measured by the number of sentences devoted to environmental issues reported in the annual report while quality of disclosures is measured by a index scored by users of financial statements with financial reporting qualifications. Both quantity of disclosure and quality of disclosure are highly correlated. The sample consists of 102 of the largest companies listed on the Australian Stock Exchange. Ordinary least squares regression is used to determine if variables selected to measure stakeholder power, strategic posture and economic performance are significant in explaining the quantity and quality of environment disclosures in annuals reports. The stakeholder power dimension of Ullmann's framework measured by shareholder, regulator and lobby groups is significant in explaining environmental disclosures. The strategic posture dimension of Ullmann's model measured by content of the mission statement and existence or otherwise of environmental or social responsibility committees also find strong statistically significant support in the results. The third dimension of economic performance is not supported by the results. Consistent with prior studies, size is found to be a significant predictor of disclosure practices.

Keywords: stakeholder theory, voluntary environmental disclosures

JEL Classification: M41, M45, M14, G34

Suggested Citation

Kent, Pamela and Chan, Christopher, Application of Stakeholder Theory to the Quantity and Quality of Australian Voluntary Corporate Environmental Disclosures. Available at SSRN: or

Pamela Kent (Contact Author)

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
+016 7 3365 6611 (Phone)
+016 7 3365 6788 (Fax)

Christopher Chan

Cisco Systems ( email )

80 Pacific Highway
North Sydney
Sydney, 2060

University of Queensland

St Lucia
Brisbane, Queensland 4072

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