Corporate governance and environmental performance and disclosures

In this study the relationships between good corporate governance practices and environmental performance and disclosure are examined. Firms that are among the major emitters of toxic emissions in the United States comprise the sample for the study. Pollution performance is measured using a methodology that includes both the toxicology of the emissions and the population density of the community. A corporate governance measure and a pollution disclosure evaluation that were previously presented in the accounting literature are utilized in the study to validate the main performance measure. The findings indicate that there is no relationship between good governance and good pollution performance. Additionally good governance is positively related to pollution disclosure while the correlation does not hold when governance was improved by SOX. The overall findings support legitimacy theory. This may indicate that the story about pollution performance is better than the actual outcome. (C) 2011 Elsevier Ltd. All rights reserved.