The Impact Of Institutional Pressure, Corporate Governance And Strategic Posture On Environmental Reporting Of Malaysian Listed Companies: The Moderating Effects Of Perceived Environmental Variables
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Date
2016-03
Authors
Shwairef, Abdalla Meftah
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
Environmental reporting is one of the most important types of reporting in relation to corporate sustainability. Currently, environmental issues have become a prominent phenomenon observable by way of environmental reporting. An in-depth assessment of the existing reporting practices is necessary to improve the level of environmental reporting in terms of transparency and accountability in order to meet the stakeholders’ demands. The objective of this study is to evaluate the level of environmental reporting in the Malaysian context in the listed companies in Bursa Malaysia. This study eventually advances the investigation of the impact of both the institutional pressure and the mechanisms of corporate governance on a strategic posture and the effect of a strategic posture on environmental reporting. This study also assesses the mediating effect of a strategic posture in the relationship between the institutional pressure, corporate governance mechanisms and environmental reporting. Furthermore, this study investigates the moderating effect of the perceived environmental variables between the relationship of a strategic posture and environmental reporting. The research framework is supported by the institutional theory, the stakeholder theory and the contingency theory. A total of 757 questionnaires were distributed to the senior-level of management in the Main Market of Malaysian listed companies; whereby 127 questionnaires were found to be usable with a response rate of 16.8 per cent. Also, the data for financial year ending 2012 is obtained from these 127 listed companies’ annual report. A technique of partial least square (PLS) second generation structural equation modelling was employed to test the hypothesized relationships. The findings of the present study revealed a low level of environmental reporting among the Malaysian listed companies. On the other hand, the study result revealed both coercive and normative pressures are significantly related with a strategic posture, whereas mimetic pressure was found to be insignificant. In the same way, board size, institutional ownership, and the presence of a CSR committee and the dimensions of corporate governance were found to be significantly associated with a strategic posture. Whilst, board independence, and ownership concentration was found to be insignificant. Also, the results of the study showed a significant effect of a strategic posture on environmental reporting. The findings of the study also provide evidence of a significant mediating effect of a strategic posture on the respective relationship between coercive pressure, normative pressure, institutional ownership and a CSR committee with environmental reporting. Finally, the present study showed a significant moderating effect of the perceived environmental munificence and the perceived environmental complexity between the relationship of a strategic posture and environmental reporting. However, an insignificant moderating effect was found between the perceived environmental uncertainty on the relationship between a strategic posture and environmental reporting. Finally, the present research provides several implications and recommendations for the existing management of organizations, business owners, practitioners, policy-makers and government bodies to improve their efforts in enhancing the environmental reporting practices.
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Keywords
Environmental reporting