Did the GAO get it right? Another look at corporate environmental disclosure

Abstract This study is motivated by the report Environmental Disclosure ‐ SEC Should Explore Ways to Improve Tracking and Transparency of Information, issued by the United States’ Government Accountability Office (GAO) in July of 2004. Given its conclusion that the lack of compelling evidence on corporate environmental disclosure requirements makes the need for changes ‘unclear’ (GAO, 2004, p.36), the purpose of this investigation is to re‐examine 10‐K report disclosure focusing solely on environmental cost information. We attempt to assess both the breadth and the depth of such disclosure and whether it has improved over the last decade. Our analysis of 10‐K reports for 148 Fortune 500 companies from 1996 to 2005 reveals that over the last decade, except for disclosures related to environmental liabilities, the level of environmental cost information being provided remains largely unchanged. Results also indicate that the depth of environmental cost disclosure appears to be limited, at best. In general, findings of this study provide additional support for the position of those stakeholder groups (and the members of Congress requesting the GAO's investigation) arguing that, in contrast to the GAO, additional guidance on corporate environmental disclosure is clearly needed