Date of Award

2011

Document Type

Thesis

Publisher

Edith Cowan University

Degree Name

Bachelor of Business Honours

School

School of Business

Faculty

Faculty of Business and Law

First Supervisor

Dr Theo Christopher

Abstract

There is a growing interest in studying voluntary environmental reporting around the world, especially in the mining industry, as there has been an increasingly focused debate about mining and its environmental responsibility, driven by strong public sentiment. The objectives of this study were, firstly, to evaluate the changes in environmental reporting over the period 2007-2010, in terms of type and volume of information disclosed in the Australian mineral mining industry, using the 2006 Global Reporting Initiative (GRI) Guidelines and secondly, to identify the key political characteristics of companies that volunteer to disclose environmental information in their annual reports. Based on the political cost framework and the review of literature, five testable hypotheses were developed. These hypotheses were generated in tenns of five explanatory variables, which were company size, rate of return on assets, effective tax return, market share and number of shareholders. A sample of 100 Australian listed mineral mining companies was selected from the Fin Analysis database at Edith Cowan University. Within those companies, annual reports for the financial years 2007, 2008, 2009 and 2010 were reviewed. Content analysis was performed on each of the 400 annual reports. The GRI environmental index was used as a guideline to identify and classify the environmental disclosures provided by sampled companies. Further information regarding the organisational characteristic such as company size, rate of return, effective tax rate, market share was collected from the Fin Analysis Database, and information on the number of shareholders was collected from the companies' 2010 annual reports. To achieve the first objective, descriptive statistics and Wilcoxon signed-rank tests were used to analyse the changes in the level and type of environmental disclosure during 2007-2010. Furthermore, to achieve the second objective of the study, which was to identify the determinants of environmental reporting in terms of political cost framework, univariate statistics and ordinary least square multiple regression were conducted. All statistical results were generated using the Statistical Program for Social Science (SPSS). The findings from the environmental reporting analysis indicated that an increasing number of Australian listed mineral mining companies were disclosing environmental information in their annual reports during 2007-2010. The relative volume of such information disclosed in the annual reports also increased during this period. However, the level (extent of reporting) of environmental disclosure in the Australian mineral mining industry was typically low, as companies only disclosed a narrow group of reporting elements from the GRI environmental performance indicators. Moreover, the results from qualitative analysis indicated that the quality of environmental disclosures is relatively low. Finally, Australian listed mineral mining companies tend to disclose categories, such as "Overall", "Energy", "Water", "Emissions, Effluents, and Waste" and "Products and Services", which are the most common concerns raised by the public. The findings from the multiple regression analysis indicated that certain variables from political cost theory are able to explain the level of voluntary environmental disclosure by Australian listed mineral mining companies in their annual reports, whilst other variables are less able to. Variables company size and effective tax rate are significant, and hence, are able to explain the level of voluntary environmental disclosure. The remaining three variables including rate of return on assets, market share, and number of shareholders are not found to be highly significant. Nevertheless, rate of return on assets and number of shareholders are moderately significant. Except for variable rate of return on assets, all variables were found to be in the expected direction. The findings of the study, subject to limitations, have implications for the users of annual reports, the preparers of annual reports, and the regulators of financial information in Australia.

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