Does the quality of country‐level governance have an impact on corporate environmental disclosure? Evidence from Gulf Cooperation Council countries

Despite the growth in corporate environmental disclosure (CED) across the world, there remains considerable heterogeneity in the extent to which firms disclose their environmental impacts. To better understand these changes and variations, we identify possible macro-level determinants of CED. Drawing on institutional theory, we examine the influence of country-level governance (CLG) upon CED amongst the non-financial sectors in Gulf Cooperation Council (GCC) countries. Descriptive findings obtained using a cross-country sample of 500 firm-year observations suggest that CED is still in its infancy in the region. Nevertheless, the data confirm an increasing trend in environmental information published in GCC companies' annual reports, but with notable differences between countries. Using measures derived from the World Governance Index (WGI), we examine the extent to which three CLG factors – voice and accountability (VA), government effectiveness (GE) and control of corruption (CC) – explain the patterns observed. We employ a panel data approach with various robustness checks and find that the association of VA with CED is insignificant or significantly positive, depending on the statistical method used, whereas GE is positively related to CED, and CC is – contrary to our expectation – negatively associated with CED. Our study contributes to the literature by providing a picture of CED in the GCC region and adding to the understanding of macro-level determinants of CED. Suggestions for future research and for policy and practice are also provided.