The impact of environmental crimes and profitability on environmental disclosure in Malaysian SME sector: The role of leverage

Figures & data

Table 1. Measurement of variables

Variables	Measurement	Sources	Refernces
Dependent variables
Environmental disclosure (EDI)	Environmental disclosure Index (11 items) (see Appendix A)	Firms Corporate Website	Fatima et al. (2015), Al‐Swidi et al. (2023).
Independent variables
Return on Assets (ROA)	Determines how effective assets are utilised to produce returns. ROE = Profit after Tax/Total Assets.	Companies Commission Malaysia	(Alodat et al. (2023), Al-Ahdal et al. (2020).
Environmental Crimes (EC)	Number of court cases/penalty given by the department of environment in the period of 7 years	Department of Environment Malaysia	Maume and Greife (2023) Van Uhm and Nijman (2022).
Control variables
Firm Size (FS)	Natural logarithm of aggregate assets	Companies Commission Malaysia	Al-Ahdal and Hashim, (2022), Alodat et al. (2023)
Growth (GROWTH)	Current year profit as opposed to the last year profit, denominated in percentage	Companies Commission Malaysia	Bisztray et al. (2023), Mansikkamäki (2023).
Moderator Variable
Leverage (LEV)	It is determined by overall debt to aggregate assets.	Companies Commission Malaysia	Al-Homaidi et al. (2021), Farhan et al. (2023)

Table 2. Descriptive statistics

	N	Minimum	Maximum	Mean	Std. Dev
EDI	696	0.00	2.00	1.2055	.51680
EC	696	0.00	7.00	1.2227	.82102
ROA	696	−18.66	.51	−1.8096	5.55115
LEV	696	−74.28	51.81	1.4135	8.21337
FS	696	3.08	14.87	7.7472	1.21852
Growth	696	−2773440	1920120	−652779	2758098

Source: The authors.

Table 3. Correlation matrix

		EDI	EC	ROA	LEV	FS	Growth
EDI	Pearson Correlation	1
EC	Pearson Correlation	.173**	1
ROA	Pearson Correlation	.008	−.029	1
LEV	Pearson Correlation	−.022	−.009	−.021	1
FS	Pearson Correlation	−.053	−.125**	.004	−.028	1
Growth	Pearson Correlation	.004	−.010	.013	.016	−.053	1

** Correlation is significant at the 0.01 level (2-tailed).

Source: The authors.

Table 4. Diagnostic Tests 6.4 direct relationship

Models	Breusch-Pagan/Cook-Weisberg	Durbin–Watson Test	Variables	Variance Inflation Factor	Skewness	Kurtosis
Model1	0.2005	1.414	EC	1.008	1.039	3.325
Model2	0.2053	1.434	ROA	1.016	0.460	3.584
			LEV	1.000	0.023	2.471
			FS	1.016	0.629	2.681
			Growth	1.007	1.878	6.963

Table 5. Regression model EDI

Variable	Coefficient	t-Statistic	Prob.
C	1.03	59.29	0.00
EC	0.06	68.25	0,00
ROA	0.00	9.25	0.00
LEV	0.00	1.49	0.14
FS	−0.01	−3.54	0.00
GROWTH	0.00	−0.52	0.60
R-squared	0.48
Adjusted R-squared	0.41
F-statistic	6.77
Prob(F-statistic)	0.000
Durbin-Watson stat	1.414

Source: The author

Table 6. The moderating effect of leverage

Variable	Coefficient	t-Statistic	Prob.
C	1.029	57.679	0.000
EC	0.066	33.234	0.000
ROA	0.000	0.584	0.560
LEV	−0.002	−9.694	0.000
EC*LEV	0.002	9.685	0.000
ROA*LEV	0.000	0.560	0.576
FS	−0.008	−3.655	0.000
GROWTH	0.000	−0.514	0.608
R-squared	0.56
Adjusted R-squared	0.46
F-statistic	5.86
Prob(F-statistic)	0.00
Durbin-Watson stat	1.434

Source: The authors.

Table 7. Regression model (EF)

Variable	Coefficient	t-Statistic	Prob.
C	−0.24	−3.54	0.00
EC	0.02	2.39	0.02
ROA	0.00	0.50	0.62
LEV	0.00	−1.49	0.14
FS	0.05	5.39	0.00
GROWTH	0.00	−0.24	0.81
R-squared	0.38
Adjusted R-squared	0.31
F-statistic	5.46
Prob(F-statistic)	0.000
Durbin-Watson stat	1.92

Source: The authors.

Table 8. Regression model (EDI) for sub-samples

Variables	Small (private ownership)		Medium (subsidiaries of listed companies/Institutional Ownership)
	Coefficient	Prob.	Coefficient	Prob.
C	0.976	0.000	2.16	0.00
EC	0.036	0.000	0.18	0.00
ROA	0.000	0.901	0.01	0.13
LEV	0.000	0.008	0.01	0.20
FS	0.000	0.647	−0.13	0.00
GROWTH	0.000	0.010	0.00	0.52
R-squared	0.11		0.15
Adjusted R-squared	0.08		0.11
F-statistic	2.30		4.33
Prob(F-statistic)	0000		000
Durbin-Watson stat	1.26		1.50

Source: The authors.

Table A1. Environmental disclosure index

Environmental Performance Indicators	Code	Maximum
Materials used	E1	5-point scale
Percentage of input that is recycled	E2	5-point scale
Discussion on recycling efforts (recycled inputs/recycled waste)	E3	5-point scale
Direct/indirect energy consumption	E4	5-point scale
Energy saved due to conservation and efficiency	E5	5-point scale
Initiatives to reduce energy consumption	E6	5-point scale
Water used disclosure	E7	5-point scale
Water recycling	E8	5-point scale
Impacts on biodiversity	E9	5-point scale
Habitats protected or restored	E10	5-point scale
Strategies or plans for managing impacts on biodiversity	E11	5-point scale
Greenhouse gas emissions	E12	5-point scale
Initiatives to reduce greenhouse gas emissions	E13	5-point scale
Other emissions disclosure	E14	5-point scale
Impacts of emissions on climate changes or country	E15	5-point scale
Wastewater disclosure	E16	5-point scale
Weight of waste and disclosure method.	E17	5-point scale
Disclosure on significant spills/environmental accidents	E18	5-point scale
Hazardous waste disclosure	E19	5-point scale
Initiative to mitigate environmental impacts of product/service	E20	5-point scale
Product packaging impact on the environment	E21	5-point scale
Fines or sanction for environmental citation	E22	5-point scale
Impacts of transportation of goods or employees	E23	5-point scale
Total environmental expenditures	E24	5-point scale

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Data availability statement

The data that support the findings of this study are available from the corresponding author upon reasonable request.