ENVIRONMENTAL REPORTING AND SHAREHOLDER STRUCTURE IN THE CASE OF ROMANIAN COMPANIES

Abstract

Because environmental 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. The literature identifies factors like public exposure, entities legitimacy, laws and regulation, characteristics of the company (management, size, profitability etc), culture as the main factors that could determine environmental reporting (Lee and Hutchinso, 2005). Within this study, I have focused on environmental reporting and I have analyses factors related to corporate governance characteristics, such as shareholder structure, in order to identify the existence of certain associations between the shareholder structure and the level of environmental reporting. The paper represent an empirical analyzes on how shareholder structure might explain the level of environmental reporting in the case of Romanian companies listed at Bucharest Stock Exchange. The sample consist in 64 entities listed at Bucharest Stock Exchange in the first, second and third tier from 10 areas of activity that may impact the environment: agriculture, forestry and fishing; the extractive industry; the manufacture industry; production and supply of electricity, thermal energy, gas, water; water distribution, sanitation, managing waste, recyclable materials recovery activities; construction; transport and storage; food industry, hotels, restaurants; the repair, retail, maintenance and installation of machinery and equipment; printing and reproduction of recorded media. I suggest a model comprising shareholder structure: percentage owned by families, percentage owned by institutional investors, percentage owned by private investors, percentage owned by foreign investors, percentage owned by board members, percentage owned by management members as factors that could explain environmental reporting. As future research we will test this model on companies listed with the London Stock Exchange. I conclude that the presence of foreign shareholders help increasing transparency maybe because they are more expose to the public and maybe because foreign investors need more relevant information’s regarding environmental performance. Companies where the percentage of the shares owned by the state is higher report more on environmental aspects maybe because the state wants to give examples of good transparency. The paper contributes to the development of the research in the field of environmental reporting and corporate governance in the case of Romanian companies and shows that foreign ownership and state ownership influence the level of environmental disclosure.

Keywords

• Shareholder Structure, Environmental Reporting, Empirical Analyses, Entity Level, Romania