Firm Characteristics and Environmental Disclosure in an Extractive Industry in Tanzania

Abstract

This study investigates the influence of firm characteristics on environmental disclosure in an extractive industry in Tanzania. The study applies legitimacy theory as the foundation for theoretical perspective. The study uses the panel data of 18 firms from 2004 to 2018 as reported in Tanzania Extractive Industry Transparency Initiative (TEITI). Data was extracted from annual reports, and a Random Effects General Least Square (GLS) regression analysis model was used for analysis. The results show that firm age, firm size, capital structure, and firm and ownership structure are significant factors that positively influence environmental disclosure. This indicates that older firms, large firms, high leveraged and firms owned by more block shareholders disclose more environmental information. However, although firm type and firm profitability factors seem to influence environmental disclosure, they are insignificant. The results help firms’ management to improve their levels of environmental disclosure, participate in environmental activities as social citizens and also ensure that they disclose more environmental information for all users to access. Regulators and policy makers could use these results to design taxation incentives with firms which are the best disclosers, or use environmental disclosure as an indicator to design public tendering system and standard setting, which may improve the current low disclosure.