Siddique, Salina, Sciulli, Nick and Faux, Jeffrey (2011) Towards A Theoretical Model for Analysing the Quality of Corporate Environmental Disclosure: Emphasising What and Why. International Review of Business Research Papers, 7 (3). pp. 194-206. ISSN 1837-5685 (print) 1832-9543 (online)

Abstract

The objective of this paper is to develop a theoretical model that would help in analysing corporate environmental disclosure in terms of what to report and why. Taking the natural resource-based view (NRBV) of firms, the model identifies ongoing environmental deterioration and environmental concern as a key driver for the firms to take strategic actions. It asserts that such environmental concern would impose constraints and also open opportunities for firms. It can also expose them into a new environmentally oriented market competition and force the managers to enter into a new strategic relationship with the natural environment. Quality signalling hypothesis (QSH) is then incorporated into the model to explain corporate environmental disclosure in annual reports and separate environmental or similar reports. The model is also linked to the different environmental philosophies and to different environmental reporting guidelines that stipulate what to report within the context of corporate environmental disclosure. The theoretical model which is based on NRBV and QSH demonstrates that firms use environmental disclosure as a strategic tool to gain a competitive advantage given the constraints and opportunities posed by the natural environment towards business organisations.

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