Unveiling environmental transparency: do firm attributes moderate the relationship between environmental performance and environmental risk disclosure quality?

Purpose The lack of depth in environmental risk disclosures in alignment with actual performance often limit transparency. This study examined how firms leverage on their unique attributes to strengthen the relationship between environmental performance and environmental risk disclosure quality. Design/methodology/approach Grounded in the voluntary disclosure and legitimacy theory, the study employed the quantitative approach and longitudinal design, using a dataset of 335 observations from 2011 to 2023 to examine the impact of environmental performance on subsequent risk disclosure quality of listed firms in Ghana. The STATA software was used to analyze the data, employing the Standard Ordinary Least Square regression model. Findings The study found a significant and positive correlation between environmental performance and environmental risk disclosure quality, indicating that better performing firms are more inclined to provide high quality environmental risk information. The moderation analysis showed that firm age significantly and positively moderates the relationship between environmental performance and risk disclosure quality relationship. Profitability showed a positive but insignificant moderation effect, while firm size showed a negative and insignificant moderation effect with industry type showing a negative but significant moderation effect on the performance-disclosure quality relationship. Research limitations/implications Environmental risk disclosure is voluntary for environmentally non-sensitive firms. Regulators and policymakers aiming to improve environmental risk disclosure quality in Ghana may adopt standards that enhance quality. Firms, particularly larger ones or those operating in environmentally sensitive industries, can benefit by enhancing their environmental risk disclosure practices to boost stakeholder trust and secure necessary resources. Originality/value This paper highlights the moderating effect of firm specific attributes in translating the impact of environmental performance into improved environmental risk disclosure quality. This study focuses on quality rather than quantity of disclosures and extends the voluntary disclosure theory.