Does Society Trump Trump? Corporate Environmental Disclosure During the Trump Administration

Accounting

Speaker:Den Patten, Illinois State University
Date: Monday 11 March 2019
Time: 13:30 - 15:00
Location: Xfi Seminar Room A

Further details

In support of legitimacy theory arguments for corporate social responsibility disclosure, a variety of prior studies document that either increases or decreases in social and regulatory cost exposures appear to lead to corresponding changes in the level of information provided. However, none of these studies investigates a situation where social and regulatory exposure changes are not in sync, a situation we argue taking place with respect to the Trump presidency in the United States. Based on a sample of 173 large U.S. firms, we find that environmental disclosure in standalone CSR reports did not change, on average, from the Pre-Trump (2014- 2015) to the Trump (2017-2018) eras. However, cross sectional analysis indicates differences across firms. Companies in environmentally sensitive industries showed significant increases in disclosure while companies headquartered in states strongly supporting Trump in the 2016 election exhibited significant decreases in disclosure relative to other firms. Our results support legitimacy theory arguments, but illustrate the importance of disentangling potentially competing effects.