The association of characteristics of Hong Kong listed companies to the extent of voluntary environmental and social disclosures

The research explores the association of characteristics of Hong Kong (HK) listed companies to the extent of voluntary environmental and social disclosures disclosed in the Main Board of the Stock Exchange of Hong Kong Limited (HKSX) in 2014 after the issue of the “Environmental, Social and Governance Reporting Guide” in HK listing rules. Implemented at the end of 2013, these rules provide environmental, social and governance reporting guidelines and key performance indices to HK listed companies to make more voluntary environment and social disclosures in their annual reports. Following previous research into the determinants of voluntary environmental and social disclosures, this study adopts legitimacy theory to test the association between many determinants of listed companies and the extent of voluntary environmental and social disclosures in HK setting after the implementation of the Guide. The study is the first to use Bloomberg data scores to measure the extent of voluntary environmental, social and governance disclosures in HK. To be included in the study, HK listed companies had to have all three Bloomberg voluntary corporate disclosure scores in 2014, resulting in a sample of 131 listed companies on the Main Board of the HKSX. Utilities and financial industries were excluded because they are regulated by specific rules and laws on reporting and disclosure. Using multiple linear regression analysis to test the association of the above characteristics, the results showed environmental, social and governance disclosure scores that were low compared to previous research. Only the corporate governance disclosure was significantly and positively associated with voluntary corporate environmental and social disclosures meaning that companies with good corporate governance practice and reporting tend to provide more voluntary corporate environmental and social disclosures. Other results showed that companies with higher media publicity and good corporate governance practice and reporting tend to provide more voluntary social disclosure. Family ownership, a significant feature of company structure in HK, impacts significantly and negatively with voluntary social disclosure so that family owned companies tend to make less voluntary social disclosures probably due to lower demand for such disclosure in family owned companies. Future researches should incorporate specific corporate governance variables to assess their associations with voluntary environmental and social disclosures. Longitudinal research approach should be used to evaluate the success of Appendix 27 and the reason of not complying with Appendix 27 should also be investigated in future research.