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ENVIRONMENTAL REPORTING AND CORPORATE GOVERANANCE FOR FTSE 100 LISTED COMPANIES

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Author(s): IENCIU IONEL-ALIN | | |

Journal: Annals of the University of Oradea : Economic Science
ISSN 1222-569X

Volume: 1;
Issue: 2;
Start page: 681;
Date: 2012;
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Keywords: Corporate Governance | Environmental Reporting | Empirical Analyses | Companies | FTSE 100

ABSTRACT
Because environmental information reporting remains voluntary on an international scale, there are major difference in terms of quality and quantity of environmental information, reported by entities from varied sectors and countries. Within this study, I have focused on internal characteristics, consisting mainly in how the entity is managed, in order to identify the existence of certain associations between the characteristics of corporate governance and the existence of environmental reporting. The literature in the field suggests various results related to the correspondence between corporate governance characteristics and environmental reporting. Within the factors suggested by the literature are the board structure, presence of the board committee, the separation between the Chairman of the Board and the Chief Executive Officer, shareholder structure. The paper represent an empirical analyze on how corporate governance characteristics might explain the level of environmental reporting. I suggest a model comprising corporate governance characteristics like: board independence, board size, existence of a Social Responsibility Committee that could explain environmental reporting. The sample comprises 48 companies listed at London Stock Exchange FTSE 100. From FTSE 100 I select only the companies that activates in sectors of activity that may have an impact on the environment such as Aerospace & Defence, Automobiles & Parts, Beverages, Chemicals, Electricity, Food & Drug Retailers, Food Producers, Gas, Water & Multiutilities, General Industrials, Health Care Equipment & Services, Household Goods, Industrial Engineering, Mining, Oil & Gas Producers, Oil Equipment, Services & Distribution, Personal Goods, Pharmaceuticals & Biotechnology, Tobacco. My results show that, from the point of view of the London Stock Exchange FTSE 100 listed companies, the presence of an environmental committee in the board help reduce the conflict of interests between the stakeholders and the company's management regarding the disclosure of environmental information. The environmental committee monitors the company’s activity regarding the impact on the environmental, bringing about increasing transparency, and independence inside the board regarding environmental aspects. For assuring a high transparency level of environmental performance within a company, the board should ensure a sufficiently large number of members able to exercise an independent reasoning in order to solve potential conflict of interest. The directors represent the interests of the stakeholders and have more influence on reporting information regarding environmental aspects.
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