Does climate governance affect waste disclosure? Evidence from the U.S.

ABSTRACT

Traditional corporate governance mechanisms can improve corporate financial and non-financial disclosures. However, how corporate climate governance affects firms’ waste disclosure remains unclear. Contributing to the emerging climate governance concept, this study investigates climate governance’s impact on waste disclosure using a sample of U.S. non-financial firms from 2002 to 2019. This study makes two contributions to the disclosure and governance literature. First, it shows that high-quality climate governance improves firms’ waste disclosure (including hazardous and non-hazardous waste disclosures). It reveals that climate governance quality affects firms’ waste disclosure through several channels. Second, we show that higher waste disclosure and climate governance quality reduce firms’ market performance. Climate governance quality has a significant positive moderating role in the relationship between waste disclosure and firms’ market performance; higher climate governance quality positively impacts firms’ market performance through waste disclosure. The results are robust to alternative proxies for waste disclosure, different regression techniques, and endogeneity issues.

KEYWORDS:

• Climate governance
• waste disclosure
• climate change
• panel data

JEL CLASSIFICATION:

• C23
• G30
• M14
• Q53

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to privacy or ethical restrictions.

Notes

¹ https://ukcop26.org/cop26-goals/.

² We start sample data collection from 2002 because of unavailability of waste data for earlier years and end in 2019 so that we can avoid the COVID-19 pandemic’s impact, which may have a substantial effect on waste production and recycling levels due to reduced economic activity globally.

³ The results documented under Model 1 of Table 8 show that several firm-level variables are significantly associated with CLIM_DUMMY but none of the firm-level variables is significantly associated with CLIM_DUMMY in Model 2. This suggests that the firm years included in the matched sample are indifferent based on the control variables and matching is performed correctly.

Additional information

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.