Environmental disclosure and idiosyncratic risk in the European manufacturing sector

Panagiotis Tzouvanas, Renatas Kizys, Ioannis Chatziantoniou, Roza Sagitova

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We study the impact of environmental disclosure on the idiosyncratic risk of European manufacturing firms. Utilizing a panel data set of 288 firms from 17 European countries during the period from 2005 to 2016, we provide evidence that environmental disclosure reduces idiosyncratic risk of investment. Our findings show that this relationship can best be justified by the stakeholder and the legitimacy theories. By contrast, predictions based on managerial opportunism appear to be unsupported by our data. In addition, results reveal that the effect of environmental disclosure on idiosyncratic risk varies significantly across the conditional distribution of idiosyncratic risk. Results remain robust under three different econometric methods; namely, (i) panel data techniques, (ii) dynamic panel data and (iii) quantile regressions.
Original languageEnglish
Article number104715
Number of pages13
JournalEnergy Economics
Early online date29 Feb 2020
Publication statusPublished - Mar 2020


  • environmental disclosure
  • idiosyncratic risk
  • panel data


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