Similarity in Corporate Environmental and Social Disclosure: A Neo-Institutional Perspective

A firm’s own industry at country-level is likely to constitute an organizational field from which emerge conformity pressures. Relying on neo-institutional theory, we assert that corporate environmental disclosure (CED) and social disclosure (CSD) follow an imitation process. Specifically, we assess the determinants and economic consequences of intra-industry similarity in CED and CSD for a sample of large firms from three different countries: Canada, France and Germany. Results suggest that, in a given year, a firm’s imitation of other firms’ CED and CSD within its industry is determined by the tendency of other firms within that industry to imitate one another. For CED, corporate governance, environmental performance and public media exposure weaken a firm’s tendency to imitate its reference group. For CSD, given reference group mimetism, corporate governance weakens a firm’s tendency to imitate its reference group. In addition, some economic variables that may represent coercive forces and a firm’s dependence upon financial resources providers also contribute to a firm’s disclosure similarity tendency. Moreover, we observe a mediating effect of the disclosure similarity process on the relationship between environmental /social performance, governance, media exposure, return on equity and stock market valuation. Finally, we observe a country effect in the similarity process with more similarity in Canada, less similarity in Germany and France. In presence of normative or coercive isomorphism, organizations are forced to comply with changes forced by external forces (i.e. regulation concerning environmental and social issues), lessening the likelihood of mimetic tendencies.