Abstract:
The impact of business activities on the environment is gradually increasing. Hence
it is vital for stakeholders to be concern on the relationship between environment
aspects and company’s decision making process. This study aims to investigate the
impact of environmental reporting on the financial performances of listed
manufacturing companies in Sri Lanka. Further, this study extends to explain the
interaction between the environmental disclosure and firm’s specific variables such
as firm size and leverage on firm’s financial performance. The main variables of the
study are, environmental disclosure being the independent variable, firm size and
leverage as the control variables and Return on Assets (ROA) as the dependent
variable. The current study use secondary data of 41 manufacturing companies in
Colombo Stock Exchange for the period of 5 years from 2013 – 2017 by using
content analysis. Correlation and multiple regression models is used to analyze the
relationships of this research study.
The results reveal that there is a significant relationship between environmental
accounting disclosures and firm’s financial performance when environmental
accounting is moderated by firm specific variables such as firm size and leverage of
the selected companies.
