The impact of environmental disclosure on value relevance: Moderating role of environmental performance
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Received March 31, 2023;Accepted September 7, 2023;Published September 18, 2023
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Author(s)Link to ORCID Index: https://orcid.org/0000-0002-6645-0376
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DOIhttp://dx.doi.org/10.21511/ee.14(2).2023.06
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Article InfoVolume 14 2023, Issue #2, pp. 69-86
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Cited by2 articlesJournal title: Accounting and Financial ControlArticle title: Toward a novel Sustainability Transparency Index for improved governance in agri-food value chains: A comparative study of Finnish and Ukrainian companiesDOI: 10.21511/afc.05(1).2024.06Volume: 5 / Issue: 1 / First page: 68 / Year: 2024Contributors: Inna Makarenko, Bodo Steiner, Kateryna YuhaiJournal title: Environmental EconomicsArticle title: The role of environmental performance in mediating the relationship between green accounting and corporate social responsibilityDOI: 10.21511/ee.15(1).2024.04Volume: 15 / Issue: 1 / First page: 46 / Year: 2024Contributors: Dwi Ratmono, Rasid Mail, Nur Cahyonowati, Dyah N. A. Janie
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Existing research lacks to adequately examine how environmental performance moderates the influence of environmental disclosure on value relevance. This study pursues to investigate the direct influence of environmental disclosures on value relevance, measured by the fair value of common equity. Moreover, it tests how environmental performance moderates the influence of environmental disclosures on value relevance.
Data were gathered from the annual reports of Jordanian industrial firms listed on the Amman Stock Exchange from 2018 to 2021. The study employed the Ohlson model to assess the value relevance. Furthermore, both earnings and the book value of equity were included as other independent variables, as required by the model.
This study found that environmental disclosures positively impact the value relevance of industrial firms listed on the Amman Stock Exchange. Moreover, such disclosures positively influence the value relevance of industrial firms with greater environmental performance. Earnings and the book value of equity also positively influence the value relevance. The results were similar to those obtained by conducting panel regression after controlling for both the industry and year effects.
It is therefore recommended that directors exploit environmental disclosures to increase the value relevance of the firm. At the same time, they should consider environmental disclosures as an essential component to integrate into future strategies. Hence, firm managers should consistently evaluate the environmental and financial performance, followed by developing well-designed strategies to increase the environmental performance and reliability of environmental disclosure due to their positive role in enhancing value relevance.
- Keywords
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JEL Classification (Paper profile tab)M41, Q56
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References59
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Tables7
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Figures1
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- Figure 1. Research model
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- Table 1. Number of firms by industry
- Table 2. Definitions of variable and source
- Table 3. Descriptive analysis of study variables
- Table 4. Pearson correlation coefficient
- Table 5. Regression analysis to examine the impact of environmental disclosure on value relevance
- Table 6. Regression analysis to examine the impact of environmental disclosure on value relevance and the impact of environmental performance on this relationship
- Table A1. Variables included in environmental disclosures and environmental performance indices
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Conceptualization
Mohammad Saleh Altarawneh
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Data curation
Mohammad Saleh Altarawneh
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Formal Analysis
Mohammad Saleh Altarawneh
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Investigation
Mohammad Saleh Altarawneh
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Methodology
Mohammad Saleh Altarawneh
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Project administration
Mohammad Saleh Altarawneh
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Resources
Mohammad Saleh Altarawneh
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Software
Mohammad Saleh Altarawneh
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Validation
Mohammad Saleh Altarawneh
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Writing – original draft
Mohammad Saleh Altarawneh
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Writing – review & editing
Mohammad Saleh Altarawneh
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Conceptualization
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The impact of strategic human resources planning on the organizational performance of public shareholding companies in Jordan
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Determinants of foreign portfolio investment: the case of Jordan
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