The consequences of environmental disclosure quality: evidence from France

Fatma Baalouch, Salma Damak Ayadi, Khaled Hussainey, Issal Haj Salem

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We examine the consequences of environmental disclosure (ED) quality. We test to see if ED quality affects the cost of equity capital (COEC), market valuation, and institutional investors. We focus on the French context as France is one of the pioneer countries in the mandatory adoption of ED. Our sample includes companies listed in the Société des Bourses Françaises (SBF) 120 index for the period 2009–2014. To measure ED quality, we use the qualitative attributes of information quality. The manual content analysis is then used to calculate the score of ED quality. We then link our ED measurement with measures of COEC, market valuation, and institutional ownership. Our analysis offers several interesting findings. First, it shows that ED quality negatively impacts COEC. It also shows that ED quality is negatively associated with higher market valuations. Finally, it provides evidence that ED quality positively affects institutional ownership. Our results indicate that enhancing ED quality leads to desirable economic consequences for disclosing companies and investors.
Original languageEnglish
Pages (from-to)8-20
JournalCorporate Governance and Sustainability Review
Issue number3
Publication statusPublished - 12 Oct 2023


  • Environmental Disclosure Quality
  • Value Relevance
  • Cost of Equity Capital
  • Ownership Holding of Institutional Investors
  • France

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