Determinants of Environmental Disclosures of US-Electric Utility Firms : Between Compliance and Voluntary Reporting

Due to its great contribution to environmental pollution, the American utility industry is increasingly under a high level of scrutiny by its stakeholders. Proponents of the legitimacy theory, argue that poor environmental performers are likely to voluntarily disclose more environmental information to legitimize their operations and ‘put a positive spin’ on how they are being perceived. Examining a sample of US utility companies, we seek to revisit the underlying relationship between environmental performance and environmental disclosure and shed the light on key variables that may affect the extent of environmental disclosures.The study finds that there is no association between utility companies’ environmental disclosures and their environmental performance and that disclosure is equally motivated by economic and legitimacy factors. These factors lead firms toward more compliance with mandatory disclosure requirements in 10K and annual reports but on the contrary, to less voluntary disclosures in their sustainability reports