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13 J. Mgmt. & Sustainability 1 (2023)

handle is hein.journals/jms13 and id is 1 raw text is: Journal of Management and Sustainability; Vol. 13, No. 1; 2023 ISSN 1925-4725 E-ISSN 1925-4733 Published by Canadian Center of Science and Education The Value Relevance of Repetitive Information-Is the Expected Social and Environmental Disclosure Informational? Luania Gomez Gutierrez' 1 Universite du Quebec A Montreal, Montreal, Canada Correspondence: Luania Gomez Gutierrez, Universite du Quebec A Montreal, 405 Rue Sainte-Catherine Est, Montreal, QC, H2L 2C4, Canada. Received: October 20, 2022 Accepted: January 10, 2023 Online Published: January 16, 2023 doi:10.5539/jms.v13n1pl URL: https://doi.org/10.5539/jms.v13n1pl Abstract This paper analyzes the value relevance of firms' social and environmental disclosure (SED) patterns expected by investors considering firms' institutional contexts. Results show that the expected SED is value relevant for Chinese firms, not value relevant for Mexican and Canadian firms, and partial value relevant for Chilean, South African, and American firms. For Chinese firms, when the expected SED is isomorphic within the country, it is positively related to market value. However, the alternative expected SED is negatively related to market value. For Chilean firms, only the isomorphic social disclosure is (positively) valued by the stock market. Whereas for South African and American firms, only the alternative social disclosure is positively related to market value. Results suggest that institutions are essential to SED valuation as they determine whether and how stock markets value SED. Researchers in the discipline of accounting has taken an interest in social and environmental activities along with the rise of environmental protection regulations. Keywords: environmental disclosure, social disclosure, firm value, neo-institutional theory, institutional logics 1. Introduction Since the market efficiency hypothesis firms' values reflect all available information at any time (Fama, 1970), stock markets can incorporate the social and environmental known information before its disclosure. A piece of information available to all market actors is the institutional pressures to which the firms' social and environmental disclosure (SED) must conform. Institutions are self-imposed social constraints to structure human relationships. They take the form of laws, rules, norms, social expectations, and shared beliefs (North, 2010). Institutions change very slowly, and their temporal stability is robust to the different individual choices (Aoki, 2010). Thus, based on the firm's institutional pressures, market actors can expect the SED of some topics, at least in a ceremonial way. This study poses the question of whether the stock market values the expected SED institutional adequacy. The term expected SED is used to designate the social and environmental topics, which disclosure can be anticipated by the market actors considering the institutional pressures managed by the firms. There are two reasons for the expected SED's market valuation. First, markets react to both SED content and information costs. After a low level of disclosure, non-financial information's costs exceed its benefits in a U-shaped relationship between a firm's market value and its social, environmental, and governance disclosure (Yu et al., 2018). Expected SED can be value relevant as an indication of future information costs. Second, the expected SED is an indication of the firm's conformity with the SED institutions. A firm's adherence to institutional demands is vital to ensure its survival and success (Scott, 2014). By disclosing social and environmental information in the same way as the other firms from their context, firms can signal to the market actors that it respects the institutions of that context. Therefore, following the SED patterns can reassure investors about their probabilities of future gains. Previous research analyzing the SED's value relevance has not yet reached a consensus (G6dker & Mertins, 2017). Several reasons may explain the differences in their results. In particular, the differences between the institutional contexts studied (Coluccia et al., 2018); analyzing social disclosure and environmental disclosure together (Verbeeten et al., 2016); the differences in SED measurement, and disregard if the SED is expected or unexpected (Cahan et al., 2016). This paper considers these aspects. To consider the differences between the institutional contexts, this study analyzes the expected SED value relevance by country. According to the neo-institutional theory (NIT) and the institutional logic perspective, the elements that intervene in the 1

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