THE VALUE RELEVANCE ON ENVIRONMENTAL INFORMATION DISCLOSURES: EVIDENCE FROM TAIWANESE LISTED FIRMS

A recent global trend has emphasized natural ecology and environmental protection, and a demand for enterprises to fulfill their social responsibility. Governments have increasingly enacted stringent legal regulations for environmental protection, such as the United Nations Framework Convention on Climate Change, the Kyoto Protocol, the three EU environmental directives of 2003. Environmental protection has become a global government focus, and relevant public interest groups and people are concerned regarding this subject. The outbreak of a series of firm fraud cases in Taiwan in the 1990s have had a significant effect on the economy and capital markets. Scholars have argued that corporate governance exists in various forms, thus, considering the corporate governance characteristic effectively enhances business performance and firm value. The McKinsey Company found that investors in good corporate governance firms in Asian countries are willing to pay a price premium above 20%. The focus of firms on environmental protection affects the competitiveness of whole countries, industries, and firms. Therefore, environmental information disclosure, firm valuation, and corporate governance are important issues of academic research and practical operation, and important practical, government, and academia topics. This study is the first to apply the Ohlson valuation model to examine the value relevance on environmental information disclosures (ED), and corporate governance characteristics (CGT) for Taiwanese listed firms. The results show that ED is related to firm value. The CGT is correlated with the valuation of ED. The research results support the value relevance of environmental information disclosure and support the issues of focus shifting hypothesis. The research results are helpful to related government authorities, practitioners, and academics to understand value relevance on environmental information disclosures and corporate governance. They provide a reference for promoting and constructing firm environmental information disclosures, environmental accounting and environmental management.