Do financial markets care about social and environmental disclosure? Further evidence and exploration from the UK

Alan Murray, C. D. Sinclair, David Power, Rob Gray

    Research output: Contribution to journalArticlepeer-review

    255 Citations (Scopus)


    Purpose – The purpose of the paper is to explore whether there is any relationship(s) between social and environmental disclosure and the financial market performance of the UK's largest companies. Design/methodology/approach – Two data sets were used in the study. The CSEAR database of UK companies provided the social and environmental disclosure component. The second data were the stock market returns earned by the largest UK companies as listed by The Times 1,000. A series of statistical tests was performed to examine whether any relationship could be detected in either the cross sectional or longitudinal data over a period of ten years. Findings – No direct relationship between share returns and disclosure was found. Neither had such a relationship been expected, in keeping with the prior literature. However, the longitudinal data revealed a convincing relationship between consistently high(low) returns and the predilection to high(low) disclosure. There is no single convincing theoretical explanation as to why this might be. Originality/value – This paper demonstrates the importance of examining a range of hypotheses on longitudinal data when other research suggests that any relationships are unlikely to be unstable year on year. More significantly, this paper is motivated not by a concern to understand better how investors' already-high returns may be bettered, but rather to explore how the alleged potential of financial markets to contribute to social responsibility and sustainability might be engaged.
    Original languageEnglish
    Pages (from-to)228-255
    Number of pages28
    JournalAccounting, Auditing & Accountability Journal
    Issue number2
    Publication statusPublished - 2006


    • Financial markets
    • Social disclosure
    • Environmental disclosure


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