Study on Environmental Disclosure Quality and Cost of Equity Capital

Abstract

This study examines the relationship between the quality of a firm’s environmental disclosure and cost of equity capital based on the sample of chemical listed companies. We measure environmental disclosure quality using a disclosure index consistent with the Global Reporting Initiative (GRI, 2006). In addition to overall disclosure quality, we consider the type (i.e., hard/soft) of the disclosure in our analysis by the multiple regression method. Our analyses provide evidence that environmental disclosure besides the soft and hard environmental disclosure is not significantly associated with the cost of equity capital.