Does environmental performance affect companies' environmental disclosure?

Purpose - This study aims to verify the presence, evolution and determinants of voluntary environmental disclosure from companies listed on the Milan Stock Exchange. The authors examined documentation of listed firms from 2006 and 2009. These years immediately precede and follow Italian legislative decree n. 32/2007, which introduced (albeit on a voluntary basis) disclosure of environment-related company information. Design/methodology/approach - The authors' approach utilizes multivariate regression analysis. The disclosure index of the years 2006 and 2009 represents the dependent variable. Independent variables include firm size, business industry, public shareholders, legislation and environmental performance. Findings - The results show positive effects on environmental disclosure related to legislative decree n. 32, the presence of government shareholdings in firms' ownership structure, business industry and firm size. The interrelation between firm size and environmental performance shows that large companies give more information only if they produce more environmental pollution, to legitimize themselves to stakeholders. Research limitations/implications - Despite the authors' contributions concerning environmental information described in the Introduction, they must express two limitations of their analysis. First, the sample analyzed is quite small (only 44 firms). Second, carbon dioxide emissions was chosen as an indicator of atmospheric pollution, yet emissions information has not been provided by Italian firms (even those that are listed on the Milan Stock Exchange), despite being accepted internationally as a measure of environmental performance in business. In addition, in Italy, there is no database ranking firms on corporate social responsibility (CSR). Practical implications - There are many reasons behind the weak or even negative roles of managers regarding social and environmental disclosure. These reasons include a dearth of resources, the profit imperative, lack of legal requirements, insufficient knowledge or awareness, poor performance and fear of bad publicity. What seems to be a real obstacle is the lack of knowledge about non-financial disclosure - in particular, how to gauge, produce and release information when it comes to a firm's interaction with environment and society, and this void causes low levels of disclosure and even the absence of such action. Some of the reasons for non-disclosure might be attributed to a lack of awareness and knowledge among corporate managers regarding CSR reporting, in general, and disclosure on eco-justice issues, in particular. Originality/value - The first contribution of this work is to realize, for the first time, a specific analysis on Italian firms' environmental disclosures. Moreover, the study extends this analysis to all entities' informative documents. This paper also allows an examination of effects of new legislation that encourages environmental information in a corporation's financial annual report. Finally, this is the first paper to conduct quantitative analysis on firms in the Italian financial market concerning environmental disclosure, as well as regression analysis to identify determinants of firms' disclosure.