Title: Does voluntary greenhouse gas emissions disclosure reduce information asymmetry? Australian evidence

Authors: Zahra Borghei; Philomena Leung; James Guthrie

Addresses: Department of Accounting and Corporate Governance, Macquarie University, Sydney, Australia ' Department of Accounting and Corporate Governance, Macquarie University, Sydney, Australia ' Department of Accounting and Corporate Governance, Macquarie University, Sydney, Australia

Abstract: Based on agency theory, this study investigates the consequences of carbon disclosure by non-greenhouse gas registered Australian companies on information asymmetry measures over a period after the introduction of the National Greenhouse and Energy Reporting Act 2007 and before the introduction of the Australian carbon tax. The level of carbon disclosure is scored through the content analysis of the annual reports. The findings support that carbon disclosure is negatively related to information asymmetry measures: the bid-ask spread and stock return volatility, in the year following disclosure. Overall, the research results are consistent with predictions of the agency theory and indicate that companies bear the extra voluntary reporting costs to achieve the perceived benefits of disclosure. The findings should be useful for corporate and stakeholders who are concerned about the value relevance of carbon disclosure in financial markets. For accounting standard setters, it highlights the urgency of carbon reporting guidelines.

Keywords: carbon emission; voluntary disclosure; information asymmetry measures; NGER Act 2007; content analysis; climate change.

DOI: 10.1504/AAJFA.2018.091055

Afro-Asian Journal of Finance and Accounting, 2018 Vol.8 No.2, pp.123 - 147

Available online: 28 Mar 2018 *

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