Internationalization and Environmental Disclosure : The Role of Home and Host Institutions

Purpose – The domestic institutional context has emerged as a key determinant of firms’ environmental disclosure, but studies have hardly addressed the extent to which exposure to foreign institutional contexts plays a role in the occurrence and contents of non-financial disclosure, crucial aspects for understanding multinationals’ accountability. This article therefore investigates the relationship between internationalization (both degree and spread) and environmental disclosure. Design/methodology/approach – It is hypothesized that both home and host country institutional pressures affect the relationship between internationalization and environmental disclosure, and that effects are more prominent in environmentally-sensitive sectors. The proposed relationships are tested using data from the Fortune Global 250. Findings – Results show a significantly negative relationship between the degree of internationalization and environmental disclosure, which is only partly mitigated by environmental governance and institutional quality in home and host countries. Only for firms in high-sensitivity sectors from high-standard countries is the relationship positive. Findings are particularly strong for the degree of internationalization; and non-significant for dispersion/spread. Originality/value – This article moves beyond the predominant focus on country-of-origin effects by adding exposure to foreign institutional contexts, for which it develops a new indicator. It renews attention to non-financial disclosure, a topic underexposed in the IB literature. Viewed from a broader IB perspective, the article provides an empirical illustration of the effect of home and host institutions on firm strategy, and of the use of different metrics to assess internationalization with divergent results for degree versus spread, as well as for sales versus assets, pointing at areas for further research