The influence of environmental performance on environmental disclosures: An empirical study in Ghana

The purpose of the study is to assess the level of corporate environmental disclosures in the corporate annual reports of mining and manufacturing companies in Ghana and their environmental performance. It further assesses the effect of environmental performance on environmental disclosures. A content analysis of the corporate annual reports of 25 companies over a 4‐year period for their environmental disclosures was undertaken using a disclosure index developed in line with Wiseman's (1982) environmental disclosure index. The environmental performance of the sampled firms was proxied by the rating score based on the AKOBEN environmental performance rating tool. A multiple regression analysis was undertaken using a random effect estimation model to test for the effects of environmental performance on environmental disclosures. The study finds that mining companies make more environmental disclosures than the manufacturing companies. Environmental performance was found to be a statistically significant but negative determinant of environmental disclosures. This indicates that mining and manufacturing companies make environmental disclosures to legitimize their activities in the society. The study did not consider the quality of the environmental disclosures. In addition, the study does not consider all companies assessed by the rating tool due to the selection criteria used in sampling the companies for the study. Management of companies needs to improve upon their environmental disclosure practices to gain legitimacy in the society. To the author's knowledge, this is the first study that uses the performance score of an environmental performance rating tool developed in the context of a developing country.