The Role of pro‐Social Orientation and National Context in Corporate Environmental Disclosure

Corporate environmental disclosure can be of strategic value for firms as they project their aspired image and seek to gain recognition and legitimacy. While the importance of environmental disclosure has been thoroughly documented and is understood, research has shed considerably less light on the forces that drive it. In this paper, we set out to explain what determines corporate environmental disclosure. In drawing upon the instrumental stakeholder theory in conjunction with institutional theory, we hypothesize that a firm's pro‐social inclination and national institutional factors provide a model for explaining the level of environmental disclosure that a firm applies. To frame and validate this model, we draw data from the Thomson Reuters ASSET4 database. We find that a firm's pro‐social orientation has a positive effect on the scale of environmental disclosure. Specifically, the results confirm the proposition that the environmental disclosure of the firm is in line with its pro‐social orientation, which manifests as stable characteristic over time. We also show that a country's environmental performance index, openness to international trade and regulatory quality positively impact environmental disclosure, while a high level of corruption affects it negatively.