Denton Collins
The University of Memphis
George Gamble
University of Houston
Kathy Hsu
University of Louisiana at Lafayette
Austin Reitenga
The University of Texas at San Antonio
Abstract: This research examines the association between firmsÂ’ financial health and the nature and tone of their environmental disclosures. Some prior literature on voluntary disclosures (e.g., Lang and Lundholm 1993) suggests that firms in relatively poor financial health will be less forthcoming in their environmental disclosures than financially healthy firms, while other literature (e.g., Frost 1997, Skinner 1994) suggests the opposite result. We document a significant association between financial health and the nature and tone of environmental disclosures, with firms in relatively poor financial health being more likely than healthy firms to issue disclosures that are negative in tone.
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