The impact of CEO power on different measures of environmental disclosure: Evidence from U.S. firms

Abstract

The purpose of this paper is to investigate if the detriment to environmental (E) disclosures as a result of a chief executive officer’s (CEO) power is different for outcome versus intention-oriented disclosure characteristics. This paper creates four measures to capture the diverse nature of E disclosures that vary in the degree of accountability and comparability they provide: a) qualitative, b) quantitative, c) effectiveness, and d) effort. Seemingly unrelated regression is used on a sample of over 2,200 U.S. publicly traded companies. Findings suggest that the relationship between CEO power and E disclosures is not uniform. Powerful CEOs suppression of the most comparable outcome-based environmental disclosures (effectiveness) is greater than the suppression of other environmental disclosures. This is a particularly relevant relationship given shifts in corporate priorities as demonstrated by the proliferation of impact investing, the growth in E reporting, and the CEO’s stated commitment to maximizing stakeholder wealth that was discussed at the August 2019 Business Roundtable