ENVIRONMENTAL DISCLOSURE URGENCY: A LITERATURE REVIEW

Abstract

The increase of public attention to environmental issues makes the companies need to be more responsible at
those matters. Environmental disclosure is a tool to meassure that responsibility. Based on the economic
perpective, prior studies tried to find out the relationship beetwen voluntary environmental disclosure (VED)
and economic performance, and they found various results. Another studies captured there are many
enviromental disclosure-performance gap phenomenon. Therefore, this study attemps to analyze whether
VED is neccesary or not and find out the cause of environmental disclosure-performance gap. The results
shows that companies with bad environmental performance are recommended to release VED for creating a
good image in order to defend its self from the third parties assesment, and companies with good
environmental performance are recommended to release VED only if it is possible to increase economic
performance. The result also shows that common causes of environmental disclosure-performance gap are
getting economic benefit as the concequences of being a environmental-friendly company without doing any
good environmental performance, besides, the company might minimize cost because environmental
disclosure is predicited can’t give any economic benefit and avoiding loss from the accuse of the third parties
who might doubt the credibility of data and look for the company’s environmental violation that caused by
producing environmental disclosure too extensively and self-serving.