Comparing environmental reporting practices of public-listed companies in Malaysia in 1999 and 2003 : an investigation of quantity and quality

Abstract

This study examines the trends in the environmental reporting practices of 110 companies listed on Bursa Malaysia in 1999 and 2003. Based on the content analysis of the annual reports, it is found that the number of reporting companies in the sample period increases from 48% to 62% whilst the mean of environmental sentences increases by nearly threefold. The study also assesses the comprehensiveness (i.e. quality) of disclosure using a 100-item index. This index is drawn based on a review of various scoring systems including the adjudication criteria used in the Association of Chartered Certified Accountants’ Malaysian Environmental and Social Reporting Awards (ACCA’s MESRA) and the National Annual Corporate Report Awards– Environmental Reporting (NACRA). Unlike the quantity of reporting, the quality of disclosure only increases very slightly (from 4% to about 7%). Additionally, the study also found that (1) more environmentally sensitive companies experienced significant increases in the quantity and quality of environmental disclosure, (2) larger companies in “all sample” and “more environmentally sensitive” group significantly increased the quantity of environmental information between the period, and (3) both environmental sensitivity and size do not influence the changes in the number of reporting companies. All these findings, to a certain extent, support social issue life cycle theory and legitimacy theory.