Does voluntary greenhouse gas emissions disclosure reduce information asymmetry? Australian evidence

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Based on agency theory, this study investigates the consequences of carbon disclosure by non-greenhouse gas registered Australian companies on information asymmetry measures over a period after the introduction of the National Greenhouse and Energy Reporting Act 2007 and before the introduction of the Australian carbon tax. The level of carbon disclosure is scored through the content analysis of the annual reports. The findings support that carbon disclosure is negatively related to information asymmetry measures: the bid-ask spread and stock return volatility, in the year following disclosure. Overall, the research results are consistent with predictions of the agency theory and indicate that companies bear the extra voluntary reporting costs to achieve the perceived benefits of disclosure. The findings should be useful for corporate and stakeholders who are concerned about the value relevance of carbon disclosure in financial markets. For accounting standard setters, it highlights the urgency of carbon reporting guidelines.
Original languageEnglish
Pages (from-to)123–147
Number of pages25
JournalAfro-Asian Journal of Finance and Accounting
Issue number2
Publication statusPublished - 2018

Bibliographical note

This paper is a revised and expanded version of a paper entitled 'Voluntary greenhouse gas emission disclosure - impact on market-based performance' presented at Accounting and Finance Association of Australia and New Zealand Conference (AFAANZ), Auckland, New Zealand, 6-8 July 2014; Pacific Basin Finance Accounting Economics and Management (PBFEAM) Conference, Melbourne, Australia, 4-5 July 2013.


  • carbon emission
  • voluntary disclosure
  • information asymmetry measures
  • NGER Act 2007
  • content analysis
  • climate change


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