V o l u n t a r y E n v i r o n m e n t a l D i s c l o s u r e
b y A u s t r a l i a n L i s t e d M i n e r a l M i n i n g C o m p a n i e s :
A n A p p l i c a t i o n o f S t a k e h o l d e r T h e o r y
T h e o C h r is t o p h e r
S en io r L e c tu re E d ith C o w an U n iv e rs ity
A u stra lia
Y .B . S ig it H u t o m o
L e c tu re r
A tm a J a y a U n iv ersity , Y o g y a k a rta In d o n e s ia
G a r y M o n r o e
P ro fe s so r o f A c c o u n tin g E d ith C o w an U n iv e rs ity
A u stra lia
A b s t r a c t
W it h in t h e s t a k e h o ld e r t h e o r y f r a m e w o r k t h is p a p e r e x a m in e s t h e e x t e n t o f
v o lu n t a r y e n v ir o n m e n t a l d is c lo s u r e ( E D ) in r e la t io n t o c h a r a c t e r is t ic s o f
A u s t r a lia n lis t e d m in e r a l m in in g f ir m s . T h r e e i n d e x e s , w o r d s , u n w e ig h t e d
a n d w e i g h t e d i n d e x , a re c a lc u la t e d t o m e a s u r e t h e a s s o c ia t io n o f t o t a l E D
a n d c a t e g o r ie s o f d i s c l o s u r e a re s ig n if ic a n t ly a s s o c i a t e d , c o n s e q u e n t l y , a
s i n g l e c o n s t r u c t is e m p l o y e d a s a s u r r o g a t e f o r t h e in d e x e s . T h e r e s u lt o f
O r d in a r y L e a s t S q u a r e s R e g r e s s i o n o f t h is c o n s t r u c t a s a d e p e n d e n t v a r i a b l e s
w it h o w n e r s h ip d i f f u s i o n , f i n a n c ia l le v e r a g e a n d m e m b e r s h ip o f t h e
A u s t r a lia n M in i n g I n d u s t r y C o u n c il ( A M I C ) a s p r o x ie s f o r s t a k e h o l d e r
p o w e r ; t h e p r e s e n c e o f a c o r p o r a te e n v ir o n m e n t a l c o m m it t e e a s a p r o x y f o r
s t r a t e g ic p o s t u r e ; r etu rn o n e q u it y a n d s y s t e m a t i c r is k a s p r o x ie s f o r
e c o n o m i c p e r f o r m a n c e ; a n d fir m s i z e a n d c o m m e r c i a l p r o d u c t io n a s c o n t r o l
v a r ia b l e s s h o w e d t h a t m e m b e r s h ip o f A M I C a n d s i z e w e r e s t a t is t ic a l ly
s i g n if ic a n t . T h e im p lic a t io n o f t h is f in d in g is t h a t f i n a n c ia l v a r i a b l e s d o n o t
e x p la in v o l u n t a r y E D a n d t h a t t h e v a r i a b le s u s e d in t h e s t r a t e g ic p o s t u r e a n d
e c o n o m i c p e r f o r m a n c e d i m e n s i o n s o f s t a k e h o l d e r t h e o r y a r e n o t s i g n i f ic a n t .
T h is im p li e s , s u b j e c t t o lim it a t i o n s o f t h e s t u d y , t h a t t h e r e g u la t o r s o f
a c c o u n t in g in f o r m a t io n w i l l n e e d t o is s u e an a c c o u n t in g s t a n d a r d i f t h e y
T h e authors a c k n o w le d g e the h elp fu l co m m en ts from C o lin D o lle y , M ich a el G ib b in s, A tiq u e Islam and G eo ffrey Soutar, w o rk sh o p participants at Edith C ow a n U n iv ersity , Curtin U n iv ersity o f T e c h n o lo g y
and p articipan ts at the 1 9 9 6 B ritish A c c o u n tin g A sso c ia tio n annual c o n feren ce at C ardiff.
V o l. 5, N o . 1, A u g 1997
r e q u ir e d e c i s i o n u s e f u l in f o r m a t io n a n d u n if o r m it y in t h e a n n u a l r e p o r t o f
m in e r a l m i n in g c o m p a n ie s .
I . I n t r o d u c t i o n
C o n c e rn fo r th e e n v iro n m e n t h as re c e iv e d c o n s id e ra b le p u b lic atte n tio n , p a rtic u la rly d u rin g th e p as t d e ca d e. A n in c re a sin g s o c ie ta l c o n c e rn fo r e n v iro n m e n ta l m a tte rs h as h e ig h te n e d th e d e m a n d fo r co m p a n ie s to b e e n v iro n m e n ta lly re sp o n sib le . S ta k e h o ld e rs are in te re ste d in e n v iro n m e n ta l in fo rm a tio n b e c a u se e n v iro n m e n ta l a c tiv itie s m a y h a v e s ig n ific a n t fin an c ia l im p lic a tio n s fo r c o m p a n ie s (G o w la n d , 1995) an d fo r th e e n v iro n m e n t.
A u s tra lia n m in in g c o m p a n ie s te n d to b e p re s s u re d fro m e n v iro n m e n ta l g ro u p s sin c e th e ir a c tiv itie s ca n h a v e a s ig n if ic a n t im p a ct o n th e e n v iro n m e n t (D e e g a n a n d G o rd o n , 1994). th e ir a c tiv itie s re q u ir e e n v iro n m e n ta lly re s p o n s ib le a c tio n s an d , as a c o n s e q u e n c e , th e re is a n eed fo r m in in g c o m p a n ie s to p ro v id e e n v iro n m e n ta l in fo rm a tio n to th e ir sta k eh o ld ers. M in in g c o m p a n ie s re sp o n d by im p le m e n tin g e n v iro n m e n ta l p ro te c tio n is t a c tiv itie s an d d is c lo s in g th e m in th e ir a n n u al rep o rts . A n n u a l re p o rts are a so u rce o f in fo rm a tio n a c tiv e ly so u g h t b y fin a n c ia l re p o rt u s e rs (A n d e rso n an d E p s te in , 1995; T ilt, 1994; R o b e rts, 1991; Z e g h a l a n d A h m e d , 19 90) b ec a u se th e y c o n ta in in fo rm a tio n w h ic h e n a b le u sers to a s s e s s th e p o te n tia l fin a n c ia l e ffe c ts o f e n v iro n m e n ta l c o n c e rn s (G ib s o n an d O ’D o n o v a n , 1994).
W h ile th e re are v a rio u s e n v iro n m e n ta l acts in A u stra lia 1, d is c lo s u re o f e n v iro n m e n ta l in fo rm a tio n in th e an n u al re p o rt is n o t m a n d a to ry . V o lu n ta ry e n v iro n m e n ta l d is c lo s u re (E D ), h o w ev er, h as lo n g b ee n p ra c tic e d b y A u stra lia n e n titie s (T ro tm a n , 1979; G u th rie an d P a rk er, 1989). R e s e a rc h e rs a rg u e th a t th e re are fa c to rs w h ic h m o tiv a te firm s to v o lu n ta rily d is c lo se e n v iro n m e n ta l in fo rm a tio n an d th is h as re s u lte d in a n u m b e r o f th e o rie s e x p la in in g th e in c id en ce o f E D . 2 .W e use s ta k e h o ld e r th e o ry to e x a m in e th e fac to rs th a t in flu e n c e v o lu n ta ry d is c lo s u re o f e n v iro n m e n ta l in fo rm a tio n b y A u stra lia n liste d m in eral m in in g c o m p a n ie s in th e ir 1993 a n n u a l rep o rts . A ll th re e d im e n sio n s o f s ta k e h o ld e r th e o ry as d e fin e d by U llm a n n (1 9 8 5 ) are ex am in ed : S ta k e h o ld e r p o w er, stra te g ic p o stu re, an d e c o n o m ic p e rfo rm a n c e .
T h is stu d y e x te n d s p rio r res ea rch by e x a m in in g th e re la tio n b e tw ee n a n u m b e r o f c o rp o ra te c h a ra c te ristic s w ith in th e d im e n s io n s o f s ta k e h o ld e r th e o ry an d c a te g o rie s o f v o lu n ta ry E D b ased on th re e d is c lo su re in d ex es. W e b e lie v e th e p rin c ip a l c o n trib u tio n o f th is stu d y is th e ex a m in a tio n o f th e e x te n t o f E D u sin g th re e in d ex es, w o rd s, u n w eig h te d in d ex (d ic h o to m o u s ) an d a w e ig h te d ind ex , w h e re th e
re la tiv e im p o rta n c e o f ite m s is b a se d o n th e p e rc e p tio n s o f fin a n c ia l a n a ly sts , in a sin g le stu d y .
T h e fin d in g s o f th is s tu d y are e x p e c te d to b e re le v a n t to an y d e c is io n b y th e re g u la to rs o f a c c o u n tin g in fo rm a tio n to in tro d u ce an a c c o u n tin g sta n d a rd in th e a re a o f E D . In p a rtic u la r th e re g u la to rs w ill fin d it u s efu l in u n d e rs ta n d in g m a n a g e m e n t m o tiv a tio n o f v o lu n ta ry E D an d th e re fo re b e in a b e tte r p o s itio n to g a u g e m a n a g e m e n t m o tiv a tio n o f v o lu n ta ry E D an d th e re fo re b e in a b e tte r p o s itio n to g a u g e m a n a g e m e n t re a c tio n to a n y p ro p o s e d a c c o u n tin g sta n d a rd in th is a re a o f d is c lo su re . T h e fin d in g s w ill a ls o b e o f in te res t to sta k e h o ld e rs.
I I . P r i o r R e s e a r c h
A n u m b e r o f p rio r stu d ie s e x a m in e th e a s s o c ia tio n b e tw e e n c o rp o ra te c h a ra c te ris tic s an d th e v o lu n ta ry d is c lo su re in A u s tra lia b y T ro tm a n a n d B ra d le y (1 9 8 1 ), K elly (1 9 8 1 ) an d D eeg an an d G o rd o n (1 9 9 4 ); o v e rs e a s re s e a rc h o n th e d e te rm in a n ts o f v o lu n ta ry d is c lo su re b y C o w en et al (1 9 8 7 ), B elk ao u i & K a rp ik (1 9 8 9 ), N e s s an d M ir z a (1 9 9 1 ), R o b erts (1 9 9 2 ) an d M a h e s h w a ri (1 9 9 2 ); a n d re s e a rc h on th e re la tio n b e tw ee n fin an c ia l p e rfo rm a n c e an d so cial a n d e n v iro n m e n ta l p e rfo rm a n c e b y M c G u ire e t al (1 9 8 8 ) an d Jag g i an d F re e d m a n (1 9 9 2 ). T h e s e p rio r s tu d ie s are re le v a n t to th is stu d y b e c a u se th e y in d ic ate w h ic h v a ria b le s in th e p a s t h a v e b e e n s ig n ific a n tly a s s o c ia te d w ith so cial a n d E D .
T h e s ig n ific a n t v a ria b le s re p o rte d in th e se s tu d ie s are firm size , so c ia l p re s s u re s, m a n a g e m e n t’s d e c isio n h o rizo n re p o rt re c ip ie n ts, e n v iro n m e n ta l s e n s itiv e ly , n a tu re o f in d u s try , so cial re s p o n s ib ility c o m m itte e , s y ste m a tic ris k , s o cial p e rfo rm a n c e , lev erag e, p o litic a l a ctio n c o m m itte e , p u b lic a ffa irs, p h ila n th ro p ic fo u n d a tio n , re tu rn on eq u ity , ag e an d re tu rn on as se ts. R o b e rts (1 9 9 2 ) h a s sp ec ia l s ig n ific a n c e fo r th is stu d y as it w as th e o n ly stu d y w h ich u tilis e d th e s ta k e h o ld e r th e o ry fra m e w o rk . F u rth e r d is c u s s io n o f th e s e v a ria b le s is p ro v id e d d u rin g th e d e v e lo p m e n t o f th e h y p o th e se s.
S o m e p rio r s tu d ie s u se an in d ex o f e n v iro n m e n ta l a n d /o r so cial d is c lo s u re as th e d e p e n d e n t v a ria b le s . T h e se in c lu d e n u m b e r o f p ag es (T ro tm a n , 1979; G u th rie & P ark er, 1989; C o w en e t al., 1987; M a h e s h w a ri, 1992; G ib so n a n d O ’D o n o v a n , 199 4), lin e b y lin e (T ro tm a n an d B rad le y , 1 981), d ic h o to m o u s (K e lly , 1981; N e s s a n d M irz a, 1991), n u m b e r o f w o rd s (D ee g an an d G o rd o n , 19 94 ), s p e c ific ity o f item (W is e m a n , 1 98 2) a n d re la tiv e im p o rta n c e (J a g g i an d F re e d m a n , 1992).
T h e c u rre n t stu d y ad d re s s e s s h o rtc o m in g s in th e s e s tu d ie s. P rio r s tu d ie s h a v e n o t c o n s id e re d c a te g o rie s o f E D . W h ere an in d e x w as u se d as th e d e p e n d e n t v a ria b le , th e im p a c t o f a lte rn a tiv e in d e x e s w a s n o t in v e stig a te d . C o n s e q u e n tly , a lte rn a tiv e in d e x e s, w o rd s, an u n w e ig h te d in d e x an d a w e ig h te d in d ex , are a p p lie d to c a te g o rie s
o f v o lu n ta ry E D . A ls o , o th e r v a ria b le s, w h ic h h a v e n o t b ee n p re v io u s ly te ste d (m e m b e rs h ip o f th e A u s tra lia n M in in g In d u s try C o u n c il (A M IC ) an d c o m m e rc ia l p ro d u c tio n ), are in c lu d e d .
I I I . T h e o r e t i c a l F r a m e w o r k a n d H y p o t h e s e s
T h re e d im e n s io n s o f s ta k e h o ld e r th e o ry are e x a m in e d in th is stu d y : sta k e h o ld e r p o w e r, s tr a te g ic p o stu re , an d e c o n o m ic p e rfo rm a n c e . O w n e rs h ip d iffu s io n , fin a n c ia l le v e ra g e a n d p o litic a l p re s s u re are u se d as p ro x ie s fo r s ta k e h o ld e r p o w e r; th e p re s e n c e o f a c o rp o ra te e n v iro n m e n ta l c o m m itte e is u se d as a p ro x y fo r stra te g ic p o s tu re ; an d re tu rn o n e q u ity a n d s y ste m a tic ris k are u s e d as p ro x ie s fo r e c o n o m ic p e rfo rm a n c e . F irm size a n d c o m m e rc ia l p ro d u c tio n are in c lu d e d as c o n tro l v a ria b le s .
S t a k e h o l d e r P o w e r
A s ta k e h o ld e r h a s d iffe re n tia l p o w e r d e p e n d e n t o n th e d e g re e o f c o n tro l o v e r re s o u rc e s re q u ir e d b y th e c o m p a n y (U llm an n , 1985). T h e m o re critic a l th e s ta k e h o ld e r re s o u rc e s , th e g re a te r th e w illin g n e s s o f th e c o m p a n y to s a tisfy th e s ta k e h o ld e r d e m a n d s. E n v iro n m e n ta l a c tiv itie s m a y a b so rb a c o n s id e ra b le a m o u n t o f an e n tity ’s re s o u rc e s . K n o w le d g e a b le in v e sto rs m a y c o n s id e r c o rp o ra te e n v iro n m e n ta l re s p o n s ib ility a c tiv itie s in m a k in g th e ir in v e stm e n t d e c is io n s b e c a u se e n v iro n m e n ta l e x p e n d itu re s ca n re d u c e s u rp lu s (e a rn in g s ) a v a ila b le fo r o w n e rs (C o o p e r, 19 88). C o n s e q u e n tly , s ta k e h o ld e rs d e m a n d in fo rm a tio n a b o u t e n v iro n m e n ta l re s p o n s ib ility ac tiv itie s. 3 In re s p o n s e , c o m p a n ie s m a y d is c lo s e th e s e a c tiv itie s in th e ir a n n u a l re p o rts to re v e a l th e fin a n c ia l im p lic a tio n s o f its e n v iro n m e n ta l a c tiv itie s . H o w e v e r, c o m p a n ie s m a y b e re lu c ta n t to d is c lo s e e n v iro n m e n ta l a c tiv itie s . H o w e v e r, c o m p a n ie s m a y b e re lu c ta n t to d is c lo s e en v iro n m e n ta l lia b ilitie s b e c a u se su ch d is c lo su re m a y b e p e rc e iv e d a s an a d m is s io n o f g u ilt (C e rf, 1993). C o n s e q u e n tly th e re m a y b e a s e le c tiv e d is c lo s u re p ro b le m w ith v o lu n ta ry E D .
O w n e r s h i p D i f f u s i o n
U llm a n n (1 9 8 5 ) arg u e d th a t d is p e rs e d o w n e rs h ip , p a rtic u la rly e n v iro n m e n ta lly c o n c e rn e d in v e sto rs, m a y in te n s ify th e p re s s u re fo r m a n a g e m e n t to re p o rt e n v iro n m e n ta l re s p o n s ib ility a ctiv itie s.
H o w e v e r, re s e a rc h o n th e re la tio n b e tw ee n o w n e rs h ip an d c o rp o ra te so cial a n d E D h a s p ro d u c e d m ix e d res u lts. C ra sw ell an d T a y lo r (1 9 9 2 ) fin d th e c o n c e n tra tio n o f o w n e rs h ip in a firm ex p la in e d th e v o lu n ta ry d is c lo s u re o f o il re s e rv e s in th e a n n u a l re p o rts o f A u stra lia n o il a n d g as c o m p a n ie s . P a tte n (1 9 9 2 ) r e p o rts th a t as a c o n s e q u e n c e o f th e E x x o n V a ld e z a c c id en t, fir m s th a t a ffilia te d w ith
A la s k a P ip e lin e S e rv ic e c o m p a n y (as a p ro x y o f o w n e rs h ip ) in c re a s in g ly d is c lo se d e n v iro n m e n ta l in fo rm a tio n . In co n tra st, R o b erts (1 9 9 2 ) fin d s th a t o w n e rs h ip d if fu s io n , i.e., 5 % o r m o re o f o u ts ta n d in g o rd in a ry sh a re s h e ld b y m a n a g e m e n t o r o th e r in d iv id u a ls, is n o t s ig n if ic a n tly re la te d to th e d e g re e o f c o rp o ra te so c ial re s p o n s ib ility d is c lo su re s .
W e p ro p o s e to fu rth e r te s t th e a rg u m e n t b y U llm a n n (1 9 8 5 ) th a t firm s w id e ly h e ld b y s h a re h o ld e rs are m o re lik ely to v o lu n ta rily d is c lo se e n v iro n m e n ta l in fo rm a tio n in th e ir a n n u al re p o rt th a n firm s c lo se ly h eld b y sh a re h o ld e rs. T h e e x p e c te d re la tio n b e tw e e n o w n e rs h ip a n d v o lu n ta ry E D is sta te d in h y p o th e s is H I :
H I : T h e e x te rn o f v o lu n ta ry E D in th e a n n u al re p o rts o f A u stra lia n listed m in eral m in in g c o m p a n ie s is p o s itiv e ly re la te d to o w n e rs h ip d iffu sio n .
O w n e rs h ip d if fu s io n is d e fin e d as a p e rc e n ta g e o f o u ts ta n d in g o rd in a ry s h a re s o w n ed b y o th e r th a n th e to p tw e n ty s h a re h o ld e rs. 4
F i n a n c i a l L e v e r a g e
L e v e ra g e can c a p tu re th e im p o rta n c e o f c re d ito rs as s ta k e h o ld e rs in a f ir m ’s w e alth , c re d ito rs a n d fin a n c ia l le n d in g in stitu tio n s m a y sh are in p o te n tia l lia b ilitie s if th e ir lo an s are s e c u re d b y c o n ta m in a te d p ro p e rtie s (D av ey , 1 994; W illia m s an d P h ilip s , 1994). A s a re su lt, th e y m ay d e m a n d a d d itio n a l in fo rm a tio n in th e an n u al re p o rt in o rd e r to a sse ss th e p ro b a b ility o f a firm m e e tin g th e ir d e b t o b lig a tio n s. T h is im p lie s th a t d is c lo s u re o f e n v iro n m e n ta l re s p o n s ib ility m a y b e lin k ed to d e b t lev els. I f c re d ito rs are c o n c e rn e d w ith e n v iro n m e n ta l re s p o n s ib ility a c tiv itie s , th e c o m p a n y is m o re lik ely to d is c lo se its e n v iro n m e n ta l ac tiv itie s .
R e s e a rc h on th e re la tio n b etw ee n le v e ra g e an d c o rp o ra te s o c ia l re s p o n s ib ility h as p ro d u c e d m ix e d re su lts. B e lk a o u i an d K arp ik (1 9 8 9 ) an d M c G u ire e t al. (1 9 8 8 ) re p o rt a s ig n ific a n t n e g a tiv e a s s o c ia tio n b e tw ee n le v erag e (to ta l d e b t to to ta l a s s e ts ) a n d th e lev el o f s o cial d is c lo su re an d so cial p e rfo rm a n c e . O n th e o th e r h an d , R o b erts (1 9 9 2 ) e m p lo y s a d iffe re n t le v e ra g e m e a su re an d fin d s th a t le v e rag e (to ta l d e b t to to ta l e q u ity ) h as a p o s itiv e re la tio n w ith so cial re s p o n s ib ility d is c lo su re .
M c G u ir e et al. (1 9 8 8 ) s u g g e s t th a t, o n th e b a sis o f th e re s u lts o f th e ir stu d y , it is w o rth y to c o n s id e r p rio r fin a n c ia l p e rfo rm a n c e as an e x p la n a to ry v a ria b le in flu e n c in g c o rp o ra te so cial re s p o n s ib ility d is c lo su re ra th e r th a n c o n c u rre n t o r s u b se q u e n t p e rfo rm a n c e , T h e ir su g g es tio n im p lie s th a t th e re m a y b e d iffe re n t e ffe c ts o f p rio r an d c u rre n t le v e ra g e o n th e e x te n t o f e n v iro n m e n ta l d is clo su re.
W e p ro p o s e to fu rth e r te s t th e le v erag e a rg u m e n t an d to in c o rp o ra te th e M cG u ire at al (1 9 8 8 ) su g g es tio n to c o n s id e r th e e ffe c t o f p rio r le v e rag e. T h e
e x p e c te d re la tio n b e tw e e n le v e ra g e an d v o lu n ta ry E D is sta te d in h y p o th e s e s H 2 a a n d H 2 b :
H 2 a: T h e e x te n t o f v o lu n ta ry E D in th e a n n u a l re p o rts o f A u stra lia n liste d m in e ra l m in in g c o m p a n ie s is p o s itiv e ly re la te d to le v e ra g e in th e p re v io u s y e ar.
H 2 b : T h e e x te n t o f v o lu n ta ry E D in th e a n n u a l re p o rts o f A u s tra lia n liste d m in e ra l m in in g c o m p a n ie s is p o s itiv e ly re la te d to le v e ra g e in th e c u rre n t y ear.
L e v e ra g e is m e a su re d as th e ra tio o f to ta l d e b t to to ta l a s s e ts as u se d b y B e lk a o u i a n d K a rp ik (1 9 8 9 ) a n d M c G u ir e e t al. (1 9 8 8 ).
P o l i t i c a l P r e s s u r e
M in e ra l m in in g c o m p a n ie s m a y b e a r p o litic a l c o n s tr a in ts . T h e s e p re s s u re s ste m fro m in te rn a tio n a l as w e ll as n a tio n a l le g is la tio n . A t an in te rn a tio n a l lev el, firm s th a t are o p e ra tin g in o v e rs e a s c o u n trie s , p a rtic u la rly in d e v e lo p in g c o u n trie s , h av e to c o m p ly w ith th e re q u ire m e n ts o f th e U n ite d N a tio n s , th e W o rld B a n k an d th e In te rn a tio n a l F in a n c e C o rp o ra tio n ( O ’N e ill, 1 993) in a d d itio n to r e la te d -c o u n try re g u la tio n s . A t a n a tio n a l le v e l, th e A u stra lia n g o v e rn m e n t h a s p la c e d s tr ic t re g u la tio n s o n th e e n v iro n m e n t a t F e d e ra l, S ta te a n d lo cal g o v e rn m e n t le v els (A u s tra lia n M in in g In d u s tr y C o u n c il (A M IC ), 1 993b; G ib s o n a n d O ’D o n o v a n , 1994). F o r e x a m p le , N e w S o u th W a le s re q u ir e s 50 p e rm its , w h e re a s N o rth e rn T e rrito ry re q u ir e s 6 0 0 p e rm its fo r n e w m in in g c o m p a n ie s (G o m e z , 1992).
B e ll a n d W a rh u rs t (1 9 9 3 ) c o n c lu d e th a t la rg e fir m s a s s o c ia te d w ith th e B u s in e s s C o u n c il o f A u s tra lia (B C A ) te n d to b e m o re p o litic a lly a c tiv e , in te rm s o f d e a lin g w ith th e p o litic a l e n v iro n m e n t an d th e lev el o f re la tio n s h ip to g o v e rn m e n t, th a n n o n -m e m b e r firm s. S im ila rly in th e U n ite d S ta tes firm s h a v e b e c o m e in c re a s in g ly in v o lv e d in p o litic a l ac tio n c o m m itte e s to a ffe c t p o litic a l d e c isio n m a k in g (K e im a n d B a y s in g e r, 1988). F u rth e rm o , R o b e rts (1 9 9 2 ) p o in ts o u t th a t “ h ig h e r le v els o f p e rc e iv e d g o v e rn m e n ta l in flu e n c e o n c o rp o ra te a c tiv ity w o u ld be e x p e c te d to lead to a g re a te r e ffo rt b y m a n a g e m e n t to m e e t e x p e c ta tio n s o f g o v e rn m e n t” (p .6 0 2 ).
T h e d e v e lo p m e n t o f s tra te g ic c o rp o ra te re p o rtin g ca n b e u s ed to re d u c e th e p e rc e iv e d p o litic a l p re s s u re o r g o v e rn m e n ta l in flu e n c e (H u iz in g an d D e k k e r, 1 992). A s g o v e rn m e n t m a y in tro d u c e p o litic a l c o n s tr a in ts b y re q u ir in g firm s to a d d re s s th e p e rc e iv e d e n v iro n m e n ta l p ro b le m s, th e firm s d is c lo se in fo rm a tio n a b o u t e n v iro n m e n ta l p ro g ra m an d p o lic y in th e ir an n u al re p o rt e x p la in in g th a t th e y co m p ly w ith e n v iro n m e n ta l s ta n d a rd a n d re g u la tio n s.
M e m b e rs h ip o f th e A M IC is se le c te d a s p ro x y o f p o litic a l c o n s tra in ts . T h e re a re tw o re a s o n s w h y A M IC m e m b e rs h ip is c h o s e n ; firs t, d e s p ite th e e x is te n c e o f m a n y s u b -m in in g o rg a n is a tio n s , th e C o u n c il re p re s e n ts th e m a jo rity o f m in in g fir m s w h ic h o p e ra te th r o u g h o u t A u stra lia . S ec o n d , th e C o u n c il s e e m s to b e m o re p o litic a lly p o w e rfu l th a n o th e r m in in g o rg a n is a tio n s to n e g o tia te o r lo b b y w ith g o v e rn m e n t a n d e n v iro n m e n ta l g ro u p s b e c a u se th e m in in g in d u s tr y is fu n d a m e n ta l to A u s tr a lia ’s e c o n o m ic d e v e lo p m e n t (A M IC , 1994; B a rn e tt, 19 94 ). T h ird , th e A M IC d e v e lo p s a n d p ro p o s e s e n v iro n m e n ta l o b je c tiv e s a n d s ta n d a rd s to g o v e rn m e n t in w h ic h th e s e s ta n d a rd s m u s t b e ad o p te d b y th e m e m b e rs.
D iffe re n t p re s s u re s o f g o v e rn m e n t o n c o rp o ra te e n v iro n m e n ta l r e s p o n s ib ility m a y le a d to d iffe re n tia l d is c lo s u re p a tte rn s a c ro s s c o m p a n ie s . T h e p ro v is io n o f E D is v ie w e d as re a c tiv e re s p o n s e to s o c ia l p re s s u re s (G u th rie a n d P a rk e r, 1 99 0). A s th e a c tiv itie s o f m in in g c o m p a n ie s are s u sc e p tib le to d e trim e n t o f th e e n v iro n m e n t, th e A M IC m e m b e rs m a y jo i n tly d e v e lo p s tr a te g ie s a n d p o lic ie s to re s to re th e e n v iro n m e n t in c lu d in g th e p ro v is io n o f an e n v iro n m e n ta l re p o rt. W e p re d ic t th a t firm s w h ic h a re m e m b e rs o f th e A M IC are m o re lik e ly to d is c lo s e e n v iro n m e n t a n d p re s s u re g ro u p s b e c a u s e th e y are m o re in fo rm e d th a n n o n -A M IC c o m p a n ie s . T h e re fo re , it is p re d ic te d th a t th e re w ill b e a p o s itiv e a s s o c ia tio n b e tw e e n m e m b e rs h ip o f th e A M IC a n d c o rp o ra te E D .
H 3: T h e e x te n t o f v o lu n ta ry E D in th e a n n u a l re p o rts o f A u s tra lia n liste d m in e ra l m in in g c o m p a n ie s is p o s itiv e ly re la te d to m e m b e rs h ip o f th e A M IC .
S tr a te g ic P o s tu re
U llm a n n (1 9 8 5 ) d is tin g u is h e s a f ir m ’s str a te g ic p o s tu re as e ith e r a c tiv e o r p a s s iv e . A c tiv e s tra te g ic p o s tu re m e a n s th a t a firm is p e rfo rm in g e n v iro n m e n ta l a c tiv itie s p ro a c tiv e ly to a d d re s s s ta k e h o ld e r in flu e n c e s. F o r e x a m p le , a firm m a y e s ta b lis h a sp e c ia l d e p a rtm e n t o r c o m m itte e , w h ic h is re s p o n s ib le fo r p re p a rin g a n d d e v e lo p in g p ro g ra m s , p o lic ie s an d s tr a te g ie s re la tin g to e n v iro n m e n ta l m a tte rs . P a s s iv e s tr a te g ic p o s tu re m e a n s th a t a firm d o e s n o t d e v e lo p a s p e c ific p o lic y o r p ro g ra m to a d d re s s th e e x is tin g e n v iro n m e n ta l issu es . S tra te g ic p o s tu re o f a c o m p a n y is p o s itiv e ly a s s o c ia te d w ith th e e x te n t o f d is c lo su re . S ta k e h o ld e r th e o ry p o s its th a t th e m o re a c tiv e th e s tra te g ic p o stu re , th e m o re lik e ly a c o m p a n y is to c a rry o u t e n v iro n m e n ta l a c tiv itie s a n d d is c lo se su ch a c tiv itie s to sta k e h o ld e rs .
T h e p r e s e n c e o f a n E n v i r o n m e n t R e s p o n s i b i l i t y c o m m i t t e e
E m p iric a l e v id e n c e su g g e s ts th a t th e p re s e n c e o f th e so c ia l re s p o n s ib ility c o m m itte e c o u ld e x p la in th e e x te n t o f so cial d is c lo s u re (C o w e n e t al., 1987; M a h e s h w a ri, 1992). S im ilarly , th e e x iste n c e o f a c o rp o ra te e n v iro n m e n ta l r e s p o n s ib ility c o m m itte e ca n d e s c rib e th e s tr a te g y o f a c o m p a n y in a d d re s s in g
e n v iro n m e n ta l issu es . T h e re fo re , an e n v iro n m e n ta l r e s p o n s ib ility c o m m itte e is s e le c te d a s a p ro x y o f a f ir m ’s str a te g ic p o s tu re .
C o m p a n ie s th a t h a v e an e n v iro n m e n ta l r e s p o n s ib ility c o m m itte e a n d m e n tio n it in th e a n n u a l re p o rt are p e rc e iv e d to h a v e an a c tiv e s tr a te g ic p o s tu re . I f c o m p a n ie s d o n o t m e n tio n it in th e ir a n n u a l re p o rt, th e y are a s s u m e d to h a v e a p a s s iv e s tra te g ic p o stu re . W e p o s it th a t c o m p a n ie s th a t h a v e an e n v iro n m e n ta l re s p o n s ib ility c o m m itte e are m o re lik e ly to d is c lo se e n v iro n m e n ta l a c tiv itie s . T h u s , w e e x p e c t a p o s itiv e re la tio n b e tw e e n th e p re s e n c e o f an e n v iro n m e n ta l c o m m itte e a n d v o lu n ta ry E D in an e n tity ’s a n n u a l re p o rt. H y p o th e s is H 4 is sta te d as fo llo w s:
H 4: T h e e x te n t o f v o lu n ta ry E D in th e a n n u a l re p o rts o f A u s tra lia n liste d m in e ra l m in in g c o m p a n ie s is p o s itiv e ly re la te d to th e p re s e n c e o f an e n v iro n m e n ta l re s p o n s ib ility c o m m itte e .
E c o n o m ic P e rfo rm a n c e
T h e th ird d im e n s io n c o n c e rn s th e e c o n o m ic p e rfo rm a n c e o f th e firm . D e a lin g w ith e n v iro n m e n ta l m a tte rs ca n b e co stly . F o r e x a m p le , in th e U S , e n v iro n m e n ta l, h e a lth a n d s a fe ty e x p e n d itu re s b y th e F o rtu n e 5 0 0 m a y b e as h ig h as $ 4 6 b illio n p e r y e a r o r 2 % o f s a le s (G re e n o an d R o b in so n , 1 9 9 2 ) o r 2 5 % to 6 0 % o f e a rn in g s (M a s tra n d o n a s an d S trife , 1 99 2 ) an d th e se c o s ts are lik ely to in c re a s e in th e fu tu re . T h e re fo re , e c o n o m ic p e rfo rm a n c e w ill d ire c tly a ffe c t a f ir m ’s a b ility to e s ta b lis h a n d m a in ta in e n v iro n m e n ta l p ro g ram s.
E c o n o m ic p e rfo rm a n c e an d e n v iro n m e n ta l r e s p o n s ib ility a c tiv itie s are re la te d (B o w m a n a n d H a ire , 1975; S p ic e r, 1 97 8) a n d th e y a re in s e p a ra b le c o m p o n e n ts o f s u s ta in a b le d e v e lo p m e n t (A M IC , 1 993 a; B e b b in g to n , 199 3; B a tle y a n d T o z e r, 19 93 ). T h is im p ie s th a t m o re fa v o u ra b le th e e c o n o m ic p e rfo rm a n c e o f a firm , th e m o re lik e ly it is to e n g a g e in e n v iro n m e n ta l a c tiv itie s a n d d is c lo s u re s . In c o n tra st, fin a n c ia lly d is tre s s e d firm s are less lik e ly to e n g a g e in e n v iro n m e n ta l a c tiv itie s an d , th e re fo re , th e y m a y h a v e less d is c lo su re s . P ro fita b ility an d s y s te m a tic risk , as m e a s u re s o f e c o n o m ic p e rfo rm a n c e , are p e rc e iv e d as c a u s a l fa c to rs th a t a llo w m a n a g e m e n t to u n d e rta k e m o re e x te n siv e e n v iro n m e n ta l re s p o n s ib ility p ro g ra m s . 5 E c o n o m ic p e rfo rm a n c e is m e a su re d on tw o d im e n s io n s , p ro fita b ility a n d s y s te m a tic risk .
R e t u r n o n e q u i t y
W e e x p e c t th a t th e m o re p ro fita b le a firm is, th e m o re lik e ly it is to m a k e e n v iro n m e n ta l d is c lo s u re s sin c e su ch firm s are b e tte r ab le to fin a n c e e n v iro n m e n ta l p ro g ra m s . T h e re a s o n is th a t, b e tte r p e rfo rm in g fir m s w a n t to sig n a l th e s u p e rio r sk ill
o f th e m a n a g e m e n t k e e p in g th e firm p ro fita b le w h ile a c h ie v in g e n v iro n m e n ta l re s p o n s iv e n e s s (B o w m a n a n d H aire , 1976; A le x a n d e r a n d B u c h o lz , 1978; 1992).
R etu rn o n E q u ity h as b e en u sed as a m e a su re o f e c o n o m ic p e rfo rm a n c e in p rio r s tu d ie s an d h a s re s u lte d in c o n flic tin g fin d in g s. T h e fin d in g s o f c e rta in s tu d ie s in d ic a te a p o s itiv e a s s o c ia tio n b e tw e e n R etu rn o n E q u ity a n d s o c ia l a n d e n v iro n m e n ta l r e s p o n s ib ility d is c lo su re (S p ic e r, 1978; M ills an d G a rd n e r, 1984; R o b e rts, 1 9 92 ) w h e re a s th e fin d in g s o f o th e r stu d ie s s u g g e s t a n e g a tiv e a s s o c ia tio n w ith so c ia l a n d e n v iro n m e n ta l p e rfo rm a n c e (B o w m a n an d H aire , 1 975; J a g g i an d F re e d m a n , 1 992). T h is im p lie s th a t c o m p a n ie s te n d to h a v e e n v iro n m e n ta lly re s p o n s ib le a c tiv itie s b u t th e y are c o n tin g e n t u p o n th e ir fin a n c ia l p ro file s (M ills an d G a rd n e r, 1 984). T h e re fo re , th is stu d y p re d ic ts th a t firm s w ith la rg e r R e tu rn o n E q u ity are lik e ly to v o lu n ta rily d is c lo se m o re e n v iro n m e n ta l in fo rm a tio n . H y p o th e s is H 5 a is
e x p re s s e d as fo llo w s: .
H 5a: T h e e x te n t o f v o lu n ta ry E D in th e a n n u a l re p o rt o f A u s tra lia n listed m in e ra l m in in g c o m p a n ie s is p o s itiv e ly re la te d to th e R etu rn o n E q u ity in th e c u rre n t y ear.
R e tu rn o n E q u ity is d e fin e d as n et in c o m e a fte r ta x a n d e x tra o rd in a ry item s to to ta l o rd in a ry sh ares.
R o b e rts (1 9 9 2 ) in d ic a te s th a t a tim e d im e n s io n o f R etu rn o n E q u ity a p p e a re d to h a v e e ffe c ts o n th e lev el o f e n v iro n m e n ta l d is c lo su re . M o re im p o rta n tly , he c o n c lu d e s th a t stro n g R etu rn o n E q u ity in th e p rio r p e rio d is p o s itiv e ly a s s o c ia te d w ith c u rre n t R e tu rn o n E q u ity an d c u rre n t so cial d is c lo su re to c h e c k th e a s s o c ia tio n . T h is stu d y ta k e s a c c o u n t o f th a t a s s o c ia tio n an d th e re fo re th e h y p o th e s is is fo rm u la te d as:
H 5 b: T h e e x te n t o f v o lu n ta ry e n v iro n m e n ta l d is c lo su re in th e a n n u a l re p o rt o f A u s tra lia n listed m in e ra l m in in g co m p a n ie s is p o s itiv e ly re la te d to th e R etu rn o n E q u ity in th e p rio r y ear.
S y s t e m a t i c R i s k
P re v io u s stu d ie s on th e re la tio n s h ip b e tw e e n s y ste m a tic ris k an d c o rp o ra te so cial an d E D h as p ro d u c e d m ix e d re su lts. T h o tm an an d B ra d le y (1 9 8 1 ) an d B elk ao u i an d K arp ik (1 9 8 9 ) fo u n d th a t s y ste m a tic ris k an d th e e x te n t o f so cial d is c lo s u re w e re p o s itiv e ly rela te d . T h o tm a n an d B rad le y c o n c lu d e th a t c o rp o ra te m a n a g e m e n t re d u c e d risk b y u n d e rta k in g so cial d is c lo su re . H o w e v er, R o b e rts (1 9 9 2 ) v ie w e d c o rp o ra tio n s w ith lo w s y ste m a tic risk as m o re lik ely to h a v e h ig h e r le v els o f so c ia l d is c lo su re . H e a rg u e d th e se c o m p a n ie s te n d e d to h a v e m o re sta b le p a tte rn s o f s to c k m a rk e t re tu rn s an d sta b le e c o n o m ic p e rfo rm a n c e w o u ld e n h a n c e th e a b ility o f a c o m p a n y to c o m m it to s o c ia lly re s p o n s ib le a c tiv itie s an d d is c lo su re s . R o b e rts (1 9 9 2 )
fo u n d a n e g a tiv e re la tio n s h ip b e tw e e n th e e x te n t o f s o c ia l d is c lo s u re a n d s y s te m a tic risk .
W e p ro p o s e to fu rth e r te s t th e s y ste m a tic ris k re la tio n s h ip a rg u m e n t b y R o b e rts (1 9 9 2 ). T h e e x p e c te d re la tio n b e tw e e n s y ste m a tic ris k a n d v o lu n ta ry E D is s ta te d in h y p o th e s is H 6:
H 6: T h e e x te n t o f v o lu n ta ry E D in th e a n n u a l re p o rts o f A u s tra lia n liste d m in e ra l m in in g c o m p a n ie s is n e g a tiv e ly re la te d to th e s y ste m a tic risk .
S y s te m a tic ris k is d e fin e d as th e c o n trib u tio n o f th e in d iv id u a l s e c u rity to p o rtfo lio risk .
C o n tr o l V a ria b le s
S iz e a n d c o m m e rc ia l p ro d u c tio n are c o n s id e re d c o n tro l v a ria b le s b e c a u se th e y m a y in te rv e n e w ith o th e r v a ria b le s a n d th e re fo re th e y sh o u ld b e c o n tro lle d (U llm a n n , 1985; C o w e n et al., 1987; B e lk a o u i a n d K alp ik , 1989; R o b e rts, 1992). R o b e rts f u rth e r n o te s th a t th e y m a y a lso re p re s e n t s o m e a s p e c ts o f s ta k e h o ld e r p o w e r, s tra te g ic p o s tu re a n d e c o n o m ic p e rfo rm a n c e .
C o m p a n y S i z e - T o t a l A s s e t s ; T o t a l S a l e s ; M a r k e t C a p i t a l i s a t i o n
P re v io u s re s e a rc h in d ic a te s th a t c o m p a n y size h a s e x p la n a to ry p o w e r to th e e x te n t o f so c ia l a n d e n v iro n m e n ta l d is c lo s u re (e.g ., T ro tm a n a n d B ra d le y , 1981; C o w a n e t al., 1987). C h e n an d M e tc a lf (1 9 8 0 ) c o n c lu d e th a t size, as a b a c k g ro u n d fa c to r, in flu e n c e s th e a s s o c ia tio n o f c o rp o ra te e n v iro n m e n ta l a c tiv itie s a n d fin a n c ia l in d ic a to rs . H o w e v e r, size is a s s o c ia te d w ith e n v iro n m e n ta lly s e n s itiv e in d u s tr ie s an d c a n n o t b e g e n e ra lis e d to in d u s trie s w h ic h are n o t e n v iro n m e n ta lly s e n s itiv e (D e e g a n a n d G o rd o n , 1994).
T h e re are th re e ra tio n a le s fo r s e le c tin g firm size as an in d e p e n d e n t v a ria b le s . F irst, la rg e r c o m p a n ie s are m o re lik ely to h a v e g re a te r p o litic a l v is ib ility o r p o litic a l c o s ts (W a tts a n d Z im m e rm a n , 1986; D e e g a n a n d C a rro ll, 19 93 ) a n d th e y p ro d u c e e n v iro n m e n ta l d is c lo s u re to m itig a te p o litic a l c o s ts (D e e g a n a n d G o rd o n , 1 99 4) o r p o litic a l v is ib ility (B e lk a o u i an d K arp ik , 1989). A s m in in g c o m p a n ie s ca n h a v e a d e trim e n ta l e ffe c t o n th e e n v iro n m e n ta l (D ie rk e s an d P re sto n , 1 977). L a rg e m in in g fir m s are lik e ly to b e s c ru tin is e d b y th e g e n e ra l p u b lic , g o v e rn m e n t, a n d e n v iro n m e n ta l in te re s t g ro u p s. In o th e r w o rd s, th e y h a v e p o litic a l p re s s u re s fro m p u b lic . T o a v o id c la im th e y are d e s tro y in g th e e n v iro n m e n t, c o rp o ra te m a n a g e m e n t te n d to d e v e lo p e n v iro n m e n ta l p o lic ie s a n d s tr a te g ie s a n d d is c lo se th e m in th e a n n u a l re p o rt. T h e in te n tio n is to s h o w th a t th e ir a c tio n s are in h a rm o n y w ith th e e n v iro n m e n t in o rd e r to a c h ie v e a s u s ta in a b le c o rp o ra tio n (E lk in g to n , 1994; G re e n o
a n d R o b in s o n , 1 992 ). T h e s e c o n d re a s o n is th a t la rg e r fir m s are m o re lik e ly to h a v e b e tte r e n v iro n m e n ta l a c tiv itie s (S p ic e r, 1978; C h e n a n d M e tc a lf , 1980). T h ird , la rg e r firm s are b e tte r a b le to af fo rd th e c o s t o f p ro d u c in g th e v o lu n ta ry in fo rm a tio n to b e d is c lo se d . 6
H a c k s to n a n d M iln e (1 9 9 6 ) stu d ie d so cia l an d e n v iro n m e n ta l d is c lo s u re s an d s e le c te d to ta l a s s e ts , to ta l s ales a n d m a rk e t c a p ita lis a tio n as th e m e a s u re o f c o m p a n y size . T h e y c o n c lu d e d th a t c o m p a n y size w as s ig n ific a n tly a n d p o s itiv e ly a s s o c ia te d w ith th e e x te n t o f c o m p a n y size. T h is stu d y c o n s id e rs all th re e m e a s u re s o f size.
C o n s e q u e n tly , la rg e r firm s are e x p e c te d to p ro d u c e m o re v o lu n ta ry d is c lo s u re s o f e n v iro n m e n ta l in fo rm a tio n . T h is le ad s to h y p o th e s is H 7:
H 7: T h e e x te n t o f v o lu n ta ry E D in th e a n n u a l re p o rts o f A u s tra lia n listed m in e ra l m in in g c o m p a n ie s is p o s itiv e ly re la te d to size.
C o m m e r c i a l P r o d u c t i o n
I t is p o s s ib le th a t s o m e m in e ra l m in in g c o m p a n ie s are m e re ly c a rry in g o u t e x p lo ra tio n a n d o th e r c o m p a n ie s are a c tiv e ly d rillin g an d e x tra c tin g m in e ra ls fro m th e ea rth . C le a rly , th e le tte r are m o re lik e ly to h a v e an a d v e rs e e ffe c t o n th e e n v iro n m e n t. C o m m e rc ia l p ro d u c tio n m e a n s th a t a c o m p a n y h a s e x tra c te d c ru d e m in e ra ls a n d m ig h t n e e d to p ro c e s s th e m fu rth e r in o rd e r to m a rk e t th e p ro d u c t to cu s to m e rs. T h u s, firm s th a t are in c o m m e rc ia l p ro d u c tio n are lik e ly to d e p le te n a tu ra l re s o u rc e s a n d b e m o re d e trim e n ta l to th e e n v iro n m e n ta l th a n n o n -c o m m e rc ia l firm s.
T h is v a ria b le s h a s n o t b e e n te ste d in p rio r s tu d ie s. It is e x p e c te d in th is stu d y th a t c o m m e rc ia l o p e ra tio n s are a s s o c ia te d w ith v o lu n ta ry E D . H y p o th e s is H 8 is sta te d a s fo llo w s:
H 8 : T h e v o lu n ta ry E D in th e a n n u a l re p o rts o f A u s tra lia n liste d m in e ra l m in in g c o m p a n ie s is re la te d to c o m m e rc ia l o p e ra tio n .
I V . M e t h o d
D a t a S o u r c e s a n d S a m p l e S e l e c t i o n
T h e s a m p le c o m p ris e s A u stra lia n m in e ra l m in in g c o m p a n ie s liste d o n th e A u s tra lia n S to c k E x c h a n g e (A S X ) in 1993. T h e s a m p le w as s e le c te d fro m th e m ic ro fic h e A n n u a l R e p o rt F ile o f th e A u stra lia n G ra d u a te S ch o o l o f M a n a g e m e n t (A G S M ). T h e A G S M F ile c o n s is ts o f th e to p 5 0 0 liste d c o m p a n ie s in A u s tra lia b y m a rk e t c a p ita lis a tio n . T o m a in ta in h o m o g e n e ity in th e sa m p le , o il a n d g a s firm s w e re e x c lu d e d a s th e y a re u s in g d iffe re n t e q u ip m e n t an d te c h n o lo g y . A ls o , o n e m in e ra l
m in in g fir m th a t h a s o il a c tiv itie s w a s e x c lu d e d fro m s a m p le J T a b le 1 d e s c rib e s th e n u m b e r o f firm s in c lu d e d in th e sa m p le.
T a b le 1
S a m p le o f t h e S t u d y
N u m b e r o f m in in g fir m s liste d o n A u s tra lia n S to ck E x c h a n g e 3 8 6 N u m b e r o f firm s n o t liste d o n th e A G S M A n n u a l R e p o rt F ile 251 N u m b e r o f m in in g firm s liste d o n th e A G S M A n n u a l R e p o rt F ile 135
N u m b e r o f O il & G a s fir m s (e x c lu d e d ) 31
N u m b e r o f S a m p le fir m s in th e s tu d y 104
M e a s u r i n g , t h e E x t e n t o f D i s c l o s u r e
T h is s tu d y u s e s th re e d iffe re n t in d e x in g sy ste m s. T h e s e a re w o rd in d e x , u n w e ig h te d in d e x a n d w e ig h te d in d ex . 8 A s u m m a ry o f th e in d e x in g p ro c e d u re u se d to s c o re e a c h in d e x is c o n ta in e d in T a b le 2.
T a b le 2
I n d e x in g P r o c e d u r e
M e t h o d P r o c e d u r e
1. w o rd In d e x a. C o u n t in d iv id u a l w o rd s o r n u m b e rs re le v a n t to th e se le c te d e n v iro n m e n ta l ite m s.
b. N u m b e rs are c o n v e rte d in to w o rd s.
c. T h e a m o u n t o f e n v iro n m e n ta l d is c lo s u re s (to ta l a n d c a te g o rie s ) is c a lc u la te d b y s u m m in g th e w o rd s fo r item s d is c lo s e d b y e a c h c o m p a n y .
2. U n w e ig h te d In d e x a. S co re ‘ 1 ’ fo r th e p re s e n c e o f a n e n v iro n m e n ta l item a n d s c o re ‘0 ’ fo r th e ab se n c e ,
b. T h e a m o u n t o f e n v iro n m e n ta l d is c lo s u re s (to ta l an d c a te g o rie s ) is c a lc u la te d b y s u m m in g th e ite m s d is c lo s e d b y e a c h co m p a n y .
3. w e ig h te d In d e x a. E a c h item is w e ig h te d o n th e b a s is o f th e r e la tiv e d e g re e o f im p o rta n ce .
b. T h e w e ig h ts o f th e ite m s is th e a v e ra g e s c o re s o f all s c o re s g iv e n b y fin a n c ia l a n a ly sts.
c. T h e a m o u n t o f e n v iro n m e n ta l d is c lo s u re s (to ta l a n d c a te g o rie s ) is c a lc u la te d b y s u m m in g th e w e ig h ts o f ite m s d is c lo s e d b y e a c h c o m p a n y .
18 . C u r r e n t c o s t s f o r e n v ir o n m e n t a l r e h a b ilit a t io n ( r e s t o r a t io n )
a c t i v i t i e s ( n o t a s p a r ts o f f in a n c ia l s t a t e m e n t )
5 . 3 6
19. T r e e r e p la n t in g ( r e v e g e t a t io n ) s c h e m e E n v ir o n m e n ta l L ia b ilities
3 . 6 8
2 0 . A d m i s s i o n o f c a u s in g e n v ir o n m e n t a l p r o b le m s ( i .. e . h e a lt h r e la t e d )
f o r r e s id e n t s
3 . 5 6
21 A c k n o w l e d g e m e n t o f d e t r im e n t a l e f f e c t s o f a c t iv i t ie s 4 . 1 0
2 2 . L it i g a t i o n r e la t e d t o e n v i r o n m e n t ( n o t lis t e d in c o n t i n g e n t
li a b il it i e s )
5 . 4 6
T otal 1 0 0
D e v e l o p i n g t h e W e i g h t e d I n d e x : R a t i n g t h e I m p o r t a n c e o f I n d i v i d u a l E D I t e m s
T h e re la tiv e im p o rta n c e o f th e in d iv id u a l e n v iro n m e n ta l ite m s as ra te d b y fin a n c ia l a n a ly s ts w a s u s e d to d e v e lo p a w e ig h te d in d e x . T h is w a s d o n e to re d u c e th e s u b je c tiv ity in v o lv e d in d e te rm in in g th e w e ig h tin g s to b e a p p lie d to th e in d iv id u a l d is c lo s u re item s. F in a n c ia l a n a ly sts o fte n u se th e an n u al re p o rt fo r m a k in g fin a n c ia l a s s e s s m e n t, in v e s tm e n t d e c is io n s an d fo r a d v isin g o th e r u s e r g ro u p s a n d are c o n s id e re d to b e “ s o p h is tic a te d u s e rs ” (A n d e rso n a n d E p ste in , 1995; M a rs to n an d S h riv e s, 19 91 ). C o n s e q u e n tly , th e ir v ie w s are c o n s id e re d a p p ro p ria te fo r th e p u rp o s e o f th is stu d y .
T h e A S X M e m b e r s ’ D ir e c to ry fo r 1 9 9 4 /1 9 9 5 w as u sed as a re fe re n c e to d is trib u te q u e s tio n n a ire s as d e s c rib e d b elo w . T h e re are 2 5 9 o rg a n is a tio n s w h ic h are m e m b e rs o f th e A S X an d th e s e o rg a n is a tio n s c o m p ris e 87 d iffe re n t s e c u ritie s a n d s to c k b ro k in g firm s. A q u e s tio n n a ire c o n s is tin g o f th e 2 2 ite m s w a s s e n t to all m e m b e rs w ith a c o v e rin g le tte r a n d a re p ly p a id en v e lo p e . 9 T h e c o v e rin g le tte r w as a d d re s s e d to th e R e s e a rc h D e p a rtm e n t o f th e re s p o n d e n ts . T h e y w e re a s k e d to sco re th e 2 2 ite m s su c h th a t th e to ta l sco re fo r th e item s e q u a ls 100.
A to ta l o f 21 re p lie s w e re u sab le y ie ld in g a 2 4 p e rc e n t re s p o n s e ra te . 10 T h e m e a n v a lu e s o f th e sc o re s w e re c a lc u la te d an d u s ed as th e w e ig h ts o f th e ite m s fo r th e w e ig h te d d is c lo s u re ind ex . T h e m e a n sc o re s o f a n a ly sts are s h o w n in T a b le 3.
R e s e a r c h D e s i g n
T o tal a s c e rta in u n d e rly in g c o n s tr u c ts P rin c ip a l C o m p o n e n ts A n a ly s is w a s u s ed to tr a n s fo rm th e in d e x e s (d e p e n d e n t v a ria b le s ) an d th e firm -s p e c ific c h a ra c te ris tic s ( in d e p e n d e n t v a ria b le s ) in to a n e w se t o f lin e a r c o m b in a tio n s . C o e ffic ie n t A lp h a w a s u s e d to te s t th e r e lia b ility o f th e d im e n s io n s o b ta in e d fro m th e P rin c ip a l C o m p o n e n ts A n a ly s is fo r th e in d e x e s an d firm c h a ra c te ristic s . T h e e x p la n a to ry p o w e r o f th e m o d e l c o n s tru c te d w a s te ste d u s in g O rd in a ry L e a st S q u a re s R eg re s s io n .
T h e v a rio u s a n a ly s e s re s u lte d in a m ix tu re o f v a ria b le s a n d th e s e a re re ta ile d b e lo w .
V . R e s u lt s
D e s c r i p t i v e S t a t i s t i c s .
T h e D e s c rip tiv e S ta tis tic s fo r th e c o n tin u o u s in d e p e n d e n t v a ria b le s are p re s e n te d in T a b le 4.
T a b le 4
D e s c r ip t i v e S t a t is t ic s f o r c o n t in u o u s in d e p e n d e n t v a r ia b l e s b e fo r e s t a n d a r d is a t io n
V a r ia b le M e a n S t a n d a r d
D e v ia tio n
M in im u m M a x im u m
T o ta l A ss e ts 4 0 6 7 6 0 4 6 6 1 0 6 0 0 8 8 5 9 8 4 3 9 3 5 0 .0 0 8 7 9 2 0 0 0 0 0 0
S ale s 2 3 1 6 8 1 6 1 1 6 7 0 2 9 4 0 3 4 .00 5 9 2 8 0 0 0 0 0 0
M a rk e t
C a p ita lis a tio n 5 7 3 5 7 2 5 4 9 1 5 3 0 6 3 8 6 2 9 2 0 0 0 0 0 0 .0 1 0 9 3 0 0 0 0 0 0 0
L e v e ra g e 9 2 4 3 .5 2 61.81 .00 5 7 4 .9 0
L e v e ra g e 93 4 5 .8 3 9 4 .5 2 .60 8 5 7 .2 0
R e tu rn o n
E q u ity 9 2 3 0 .0 7 1 30.47 -4 5 4 .9 0 7 9 5 .5 4
R e tu rn o n
E q u ity 93 2 5 .6 5 9 5 .0 9 -4 0 7 .4 0 5 4 0 .0 0
O w n e rs h ip
D iffu s io n 2 3 .1 6 14.78 2 .2 6 7 5 .4 7
S y s te m a tic R is k 1 20 .42 7 0.6 5 -6 9 .0 0 4 2 4 .0 0
F a c t o r A n a l y s i s : D e p e n d e n t V a r i a b l e s
W o rd In d e x
P rin c ip a l C o m p o n e n ts A n a ly s is o f W o rd c a te g o rie s 1,2,3 a n d 4 re v e a l o n e f a c to r w ith a n e ig e n v a lu e g re a te r th a n o n e w h ic h e x p la in s a p p ro x im a te ly 6 0 % o f v a ria n c e . T h e fo u r c a te g o rie s lo a d e d o n th e s in g le d im e n s io n w h ic h a p p e a re d to b e a re lia b le m e a s u re a s C o e ffic ie n t A lp h a is 0 .6 1 . T h e P e a rs o n C o rre la tio n b e tw e e n th e fa c to r s c o re s o f W o rd c a te g o rie s 1 to 4 a n d W o rd T o ta l is .97. O n th e b a s is o f th is r e s u lt w e c o n c lu d e th a t ‘W o rd T o ta l’ is a s u ita b le s u rro g a te fo r W o rd c a te g o rie s 1 to
4 an d , c o n s e q u e n tly , W o rd T o tal is u sed as th e d e p e n d e n t v a ria b le in s u b s e q u e n t a n a ly sis .
U n w e ig h te d In d e x
A P rin c ip a l C o m p o n e n ts A n a ly s is o f U n w e ig h te d c a te g o rie s 1,2,3 a n d 4 r e v e a ls o n e fa c to r w ith an eig e n g re a te r th a n o n e w h ic h e x p la in s a p p ro x im a te ly 7 0 % o f th e v a ria n c e . T h e fo u r c a te g o rie s lo a d ed o n th e sin g le d im e n s io n w h ic h a p p e a re d to b e a re lia b le m e a s u re as C o e ffic ie n t A lp h a is 0 .7 4 . T h e P e a rs o n C o rre la tio n b e tw e e n th e f a c to r s c o re s o f U n w e ig h te d c a te g o rie s 1 to 4 U n w e ig h te d T o ta l is .97. O n th e b a s is o f th is re s u lt w e c o n c lu d e th a t ‘U n w e ig h te d T o t a l’ is a s u ita b le s u rro g a te fo r U n w e ig h te d c a te g o rie s 1 to 4 an d , c o n s e q u e n tly , U n w e ig h te d T o ta l is u s e d as th e d e p e n d e n t v a ria b le in s u b se q u e n t a n aly sis.
W e ig h te d In d e x
A P rin c ip a l C o m p o n e n ts A n a ly s is o f W e ig h te d c a te g o rie s 1,2,3 a n d 4 re v e a ls o n e fa c to r w ith an e ig e n v a lu e g re a te r th a n o n e w h ic h e x p la in s a p p ro x im a te ly 6 8 % o f th e v a ria n c e . T h e fo u r c a te g o rie s lo a d ed o n th e sin g le d im e n s io n w h ic h a p p e a re d to b e a re lia b le m e a s u re as C o e ffic ie n t A lp h a is 0 .6 9 . T h e P e a rs o n C o rre la tio n b e tw e e n th e fa c to r s c o re s o f W e ig h te d c a te g o rie s 1 to 4 a n d W e ig h te d T o ta l is .97. O n th e b a s is o f th is re s u lt w e c o n c lu d e d th a t ‘W e ig h te d T o ta l’ is a s u ita b le s u rro g a te fo r W e ig h te d c a te g o rie s 1 to 4 an d , c o n s e q u e n tly , W e ig h te d T o ta l is u se d a s th e d e p e n d e n t v a ria b le in s u b s e q u e n t a n a ly sis.
T o ta l In d e x
A P rin c ip a l C o m p o n e n ts A n a ly s is o f W o rd T o ta l, U n w e ig h te d T o ta l an d W e ig h te d T o ta l re v e a ls o n e fa c to r w ith an e ig e n v a lu e g re a te r th a n o n e w h ic h e x p la in s a p p ro x im a te ly 9 1 % o f th e v a ria n c e . T h e S ta n d a rd is e d S c o re s o f th e th re e to ta l in d e x e s lo a d e d o n to th e s in g le d im e n s io n w h ic h a p p e a re d to b e a re lia b le m e a s u re a s C o e ffic ie n t A lp h a is fo u n d to b e 0 .9 5 . T h e P e a rs o n C o rre la tio n b e tw e e n th e fa c to r s c o re s o f W o rd T o ta l, U n w e ig h te d T o ta l an d W e ig h te d T o ta l are s ig n ific a n t a t th e 0 .0 0 lev el. O n th e b a s is o f th is o f r e s u lt w e c o n c lu d e th a t th e sin g le F a c to r S c o re is s u ita b le s u rro g a te fo r th e d e p e n d e n t v a ria b le s W o rd T o ta l, U n w e ig h te d T o ta l a n d W e ig h te d T o ta l a n d , c o n s e q u e n tly , th is is u s e d as th e d e p e n d e n t v a ria b le s fo r E D in s u b se q u e n t an aly sis.
F a c t o r A n a l y s i s : I n d e p e n d e n t V a r i a b l e s
T h e P rin c ip a l C o m p o n e n ts a n a ly sis re s u lte d in fo u r fa c to rs w ith e ig e n v a lu e s g re a te r th a n o n e th a t, to g e th e r, e x p la in e d 8 6 % o f th e v a ria n c e . 11 T a b le 5 s h o w s th e f a c to r m a trix a f te r a v a rim a x ro ta tio n to fin d s im p le s tru c tu re .
T a b le 5
V a r i m a x R o t a t e d F a c t o r M a t r i x *
F a c t o r 1 F a c t o r 2 F a c t o r 3 F a c t o r 4
S iz e L e v e r a g e R e t u r n o n E q u it y O w n e r s h ip
T o ta l A ss e ts .9 8 4 6 8
S ale s .9 7 0 75
M a rk e t C a p ’n 9 67 91
L e v e ra g e 92 .9 7 7 1 8
L e v e ra g e 93 9 7 7 6 2
R O E 9 2 .8 80 23
R O E 93 .8 7 7 5 6
O w n e rs h ip
D iffu s io n .81741
S y s te m a tic .76531
R is k
* T h e fa c to r lo a d in g s n o t re p o rte d w e re le ft o u t o f th e ta b le to im p ro v e re a d ib ility .
F a c to r 1 m e a su re d a S ize d im e n s io n as it w as re la te d to A ss e ts , S ale s a n d M a rk e t C a p ita lis a tio n ; F a c to r 2 m e a su re d a F in a n c ia l R is k in e s s d im e n s io n as it w a s re la te d to L e v e ra g e 9 2 an d L e v e ra g e 9 3 ; F a c to r 3 m e a s u re d a R e tu rn o n E q u ity d im e n s io n as it re la te d to re tu rn o n E q u ity 9 2 a n d R etu rn o n E q u ity 9 3 ; F a c to r 4 an O w n e rs h ip d im e n s io n . ^
R e lia b ility T e s ts are u n d e rta k e n o n th e fo u r fa c to rs a n d th e A lp h a C o e ffic ie n ts are fo u n d to b e .90, .92, .66 a n d .20 re s p e c tiv e ly . B e c a u s e o f th e lo w r e lia b ility o f F a c to r 4 a n d lac k o f a th e o re tic a l re la tio n b e tw e e n o w n e rs h ip d iffu s io n a n d s y s te m a tic risk th e y w ere u sed as s e p a ra te v a ria b le s in s u b s e q u e n t a n a ly sis.
O r d i n a r y L e a s t S q u a r e s R e g r e s s i o n
T h e p re c e d in g a n a ly s is o f th e d e p e n d e n t a n d in d e p e n d e n t v a ria b le s s u g g e s ts th e fo llo w in g m o d e l:
E D = F u n c tio n ( S ize, L e v e ra g e , R e tu rn o n E q u ity , O w n e rs h ip D iffu s io n , S y s te m a tic R is k , E n v iro n m e n ta l C o m m itte e , M e m b e rs h ip o f A M IC )
d e p e n d e n t v a ria b le w ith M e m b e rs h ip o f A M IC , L e v e ra g e 9 2 , L e v e ra g e 9 3 , S y s te m a tic R is k , R e tu rn o n E q u ity 9 2, R etu rn o n E q u ity 9 3 , E n v iro n m e n ta l C o m m itte e , O w n e rs h ip D if fu s io n , A ss e ts, S ale s a n d M a rk e t C a p ita lis a tio n as in d e p e n d e n t v a ria b le s sh o w e d th a t m e m b e rs h ip o f A M IC , A ss e ts, S a le s a n d M a rk e t C a p ita lis a tio n w e re s ta tis tic a lly s ig n ific a n t a t th e 0 .0 0 lev el.
T h e im p lic a tio n o f th is fin d in g is th a t, a c c o u n tin g b a s e d fin a n c ia l m e a s u re s d o n o t a p p e a r to e x p la in v o lu n ta ry E D in th e a n n u a l re p o rt o f m in e ra l m in in g c o m p a n ie s . C o n s e q u e n tly , u s e rs (e.g ., le n d e rs) ca n o n ly e x p e c t c o n s is te n t E D b y la rg e r c o m p a n ie s th a t are m e m b e rs o f th e A M IC . T h is im p lie s th a t th e re g u la to rs o f a c c o u n tin g in fo rm a tio n w ill n ee d to iss u e an a c c o u n tin g sta n d a rd o n E D i f th e y re q u ire d e c is io n u s e fu l in fo rm a tio n an d u n ifo rm ity in th e a n n u a l re p o rt o f all c o m p a n ie s . F u rth e rm o re , c a te g o rie s o f E D d o n o t a p p e a r to p ro v id e a d d itio n a l in fo rm a tio n .
T h is s tu d y a lso p ro v id e d e m p ir ic a l e v id e n c e o n th e v o lu n ta ry E D b y A u s tra lia n listed m in e ra l m in in g c o m p a n ie s w ith in th e s ta k e h o ld e r th e o re tic a l fra m e w o rk . It w as fo u n d th a t n o t all th re e d im e n s io n s o f th e th e o ry w e re s ig n ific a n t in th e m o d e l. In th e s ta k e h o ld e r p o w e r d im e n s io n , m e m b e rs h ip o f th e A M IC a n d S iz e a C o n tr o l V a ria b le w e re s ig n ific a n t v a ria b le s . V a ria b le s u s e d as s u rro g a te s in th e s tra te g ic p o s tu re d im e n s io n a n d th e e c o n o m ic p e rfo rm a n c e d im e n s io n , w e re fo u n d n o t to b e s ig n ific a n t.
T h e re fo re , th e s ta k e h o ld e r th e o re tic a l fra m e w o rk o n ly w e a k ly e x p la in e d p ra c tic e o f e n v iro n m e n ta l d is c lo s u re b y A u stra lia n liste d m in e ra l m in in g c o m p a n ie s . T h e im p lic a tio n o f th is fin d in g is th a t o th e r v a ria b le s n ee d to be in c lu d e d in th e d im e n s io n s o f th e s ta k e h o ld e r m o d e l. F o r e x a m p le , s o u rc e s o f in fo rm a tio n o th e r th a n th e a n n u a l re p o rt. Id e a lly , lo c atio n o f m in in g c o m p a n ie s c o u ld b e u sed to te s t th e s e n s itiv ity o f m in in g a re a b u t th is is n o t p o s sib le fo r all c o m p a n ie s as a c o n s id e ra b le n u m b e r h a v e m u ltip le lo c atio n s.
T h e re s u lts o f th is stu d y are s u b je c t to se v e ra l lim ita tio n s. T h e stu d y w as lim ite d to m in e ra l m in in g c o m p a n ie s listed in th e A G S M A n n u a l R e p o rt F ile. T h is d a ta so u rc e c o n ta in s th e to p 5 0 0 fir m s b y m a rk e t c a p ita lis a tio n th e re fo re th e re s u lts m a y n o t b e g e n e ra liz a b le . In ad d itio n , th is s tu d y in c lu d e s o n ly a s in g le p e rio d o f o b s e rv a tio n s . O n ly o n e u s e r g ro u p , fin a n c ia l a n a ly sts w ere u se d to a s s e s s th e re la tiv e im p o rta n c e o f ea c h e n v iro n m e n ta l item o f d is c lo s u re an d th is m a y in tro d u c e b ia s into th e re su lts. F u rth e rm o re , E D is n o t re s tr ic te d to th e a n n u a l re p o rt, as s o m e c o m p a n ie s d is c lo s e th e in fo rm a tio n in o th e r m e d ia in stru m e n ts . A s ta k e h o ld e r g ro u p m a y h a v e s u ffic ie n t p o w e r to d e m a n d in fo rm a tio n n o t v o lu n ta rily d is c lo s e d in th e a n n u a l rep o rt.
T h e lim ita tio n s o f th is stu d y s u g g e s t d ire c tio n s fo r fu tu re re s e a rc h . A lo n g itu d in a l s tu d y w h ic h in c lu d e s all listed m in e ra l m in in g c o m p a n ie s w o u ld e n h a n c e th e g e n e ra liz a b ility o f th e fin d in g s. O th e r u s e r g ro u p s c o u ld b e to a s s e s s th e r e la tiv e im p o rta n c e o f th e e n v iro n m e n ta l item s. A ls o , s o u rc e s o f e n v iro n m e n ta l in fo rm a tio n o th e r th a n th e a n n u a l re p o rt c o u ld b e in in v e s tig a te d a n d in c lu d e d a s an a d d itio n a l v a ria b le .
F u rth e r re s e a rc h co u ld b e u n d e rta k e n in s e v e ra l d ir e c tio n s . A n in v e s tig a tio n in to t h e d is c lo s e p ro c e s s e s m a y p ro v id e fu rth e r in s ig h t in to v o lu n ta ry E D . 13 x h e im p a c t o f d iffe re n t in d e x s y ste m s to th o s e u s ed in th is s tu d y o n E D (e .g ., n u m b e r o f p a g e s ). R e s e a rc h in E D c o u ld b e e x te n d e d to in c lu d e o il a n d g a s c o m p a n ie s a n d in d u s tria l c o m p a n ie s . T h e n e e d s o f d iffe re n t u s e r g ro u p s a n d h o w th e y e v a lu a te a n d u tilis e th is in fo rm a tio n co u ld b e in v e stig a te d . F in a lly , as e n v iro n m e n ta l m a tte rs a re a g lo b a l is su e , th e p ra c tic e o f v o lu n ta ry E D c o u ld b e e x a m in e d in o th e r c o u n trie s w ith d if f e r e n t cu ltu re s .
A lth o u g h th e fin d in g s d o n o t s u p p o rt all o f th e h y p o th e se s , th e a p p lic a tio n o f th e s ta k e h o ld e r th e o re tic a l fr a m e w o rk to g e th e r w ith th e th re e d iffe re n t in d e x e s a n d c a te g o rie s o f d is c lo s u re in o n e stu d y re fle c ts th e e ffic a c y o f th e s ta k e h o ld e r fra m e w o rk o n c o rp o ra te e n v iro n m e n ta l d is c lo s u re in A u stra lia . A n e w v a ria b le , th e m e m b e rs h ip o f th e A M IC , w a s sig n ific a n t. T h e re s u lts o f th is s tu d y a u g m e n t th e u n d e rs ta n d in g o f p ra c tic e o f v o lu n ta ry E D b y A u stra lia n liste d m in e ra l m in in g c o m p a n ie s .
N o t e s
1. F o r e x a m p le , E n v iro n m e n ta l P ro te c tio n A cts.
2. F o r a d is c u s s io n o n th e th e o rie s an d th e ir s tr e n g th s an d w e a k n e s s e s see G ra y e t al (1 9 9 5 ).
3. M a s tra n d o n a s a n d S trife (1 9 9 2 ) re p o rte d th a t th e in fo rm a tio n m o s t fre q u e n tly d e m a n d e d b y in v e sto rs re la te d to p e n a ltie s an d ca p ita l e x p e n d itu re s .
4. T h e p e rc e n ta g e o f o rd in a ry sh a re s o w n e d b y th e to p tw e n ty s h a re h o ld e rs is a d is c lo s u re re q u ire m e n t o f A u s tra lia n C o rp o ra tio n L aw .
5. It is p e rc e iv e d th a t m e e tin g e n v iro n m e n ta l r e s p o n s ib ility g o a ls is a s e c o n d a iy o b je c tiv e b e c a u s e an a c c e p ta b le lev el o f e c o n o m ic p e rfo rm a n c e is n e c e s s a ry p rio r to d e v o tin g re s o u rc e s fo r e n v iro n m e n ta l a c tiv itie s (U llm a n n , 1985; R o b e rts, 19 92).
6. T h is a rg u m e n t a s s u m e s th e in fo rm a tio n is c o s tly to p ro d u c e a n d th a t a m o u n t o f th e c o s t is m a te ria l.
7. A list o f th e s e c o m p a n ie s are a v a ila b le o n re q u e s t fro m au th o rs .
8. F o r a fu ll d is c u s s io n o n th e stre n g th s an d w e a k n e s s e s o f in d e x e s see M a rs to n a n d S h riv e s (1 9 9 1 ).
9. T h e o rd e r o f th e 2 2 item s w a s ra n d o m is e d fo r e a c h o f th e q u e s tio n n a ire s th a t w e re m a ile d . T h e ra n d o m is a tio n w a s d o n e in o rd e r to av o id a p o s s ib le b ia s th a t c o u ld o c c u r fro m “ o rd e r e ffe c ts ” d u e to th e o rd e rin g o f th e 2 2 in d iv id u a l item s.
10. F o w le r (1 9 9 3 ) c o n te n d s th a t c re d ib le s ta tis tic a l re s u lts w ill b e o b ta in e d i f th e re s p o n s e ra te is n o t lo w er th a n 20 p e r cen t. T h re e o f th e q u e s tio n n a ire s w ith a s c o re o f g re a te r th a n 100 (e.g ., 103) w e re w e ig h te d to 100.
11. C o m m e rc ia l p ro d u c tio n w as re m o v e d fro m th e a n a ly s is b e c a u se all c o m p a n ie s in th e s a m p le h ad a c o m m e rc ia l o p eratio n .
12. In an in itia l a n a ly sis P o litic a l P re s su re a n d E n v iro n m e n ta l C o m m itte e lo a d e d o n th e S iz e d im e n s io n . H o w e v e r, as th e s e v a ria b le s a p p e a re d u n re la te d to s ize th e y w e re re m o v e d an d th e a n a ly sis re p e a te d a n d th e d im e n s io n s re m a in e d u n c h a n g e d . C o n s e q u e n tly , it w a s d e c id e d to tr e a t P o litic a l P re s s u re a n d E n v iro n m e n ta l C o m m itte e as s e p a ra te in d e p e n d e n t v a ria b le s .
13. S ee fo r e x a m p le , G ib b in s et al. (1 9 9 0 ).
R e f e r e n c e s
A le x a n d e r , G . & B u c h o l z , R . ( 1 9 7 8 ) , ‘C o r p o r a t e s o c ia l r e s p o n s ib i li t y a n d s t o c k m a r k e t
p e r f o r m a n c e ’ , A c a d e m y o f M a n a g e m e n t J o u r n a l , 2 1 ( 3 ) : 4 7 9 - 4 8 6 .
A n d e r s o n , R . & E p s t e i n , M . ( 1 9 9 5 , A p r il) , ‘T h e u s e f u l n e s s o f a n n u a l r e p o r t s ’ , A u s t r a l i a n
A c c o u n t a n t , 2 5 - 2 8 .
A u s t r a lia n G r a d u a te S c h o o l o f M a n a g e m e n t ( A G S M ) . ( 1 9 9 3 b , S e p t e m b e r ) , R i s k m e a s u r e m e n t
s e r v i c e , S y d n e y : T h e U n i v e r s i t y o f N e w S o u t h W a le s .
A u s t r a lia n M in i n g I n d u s tr y C o u n c il ( A M I C ) . ( 1 9 9 3 a , A p r i l) , ‘M in in g a n d t h e e n v i r o n m e n t ’ ,
M i n i n g I s s u e s .
A u s t r a lia n M in in g I n d u s tr y C o u n c il ( A M I C ) . ( 1 9 9 3 b , A p r il ) , ‘M in in g a n d t h e e n v i r o n m e n t ’ ,
M i n i n g I s s u e s .
