Keywords: environmental disclosure, environmental legislation, Superfund, discretionary disclosure thesis, legitimacy thesis
The extent of environmental disclosures: effects of regulatory costs and level of exposure to environmental risk
This paper examines the relation between environmental disclosures resulting from environmental legislation and the regulatory costs and level of the environmental exposure for a sample of 51 US chemical firms. The results show that environmental disclosures included as discretionary disclosures in the 10-K reports in 1984 prior to the enactment of SARA (The Superfund Amendments and Reauthorization Act of 1985 and 1986) are related positively to regulatory costs and the level of exposure to environmental risk as measured by the logarithm of chemical revenues. A primary contribution of this research is a verification of the discretionary disclosure and legitimacy theses.