Environmental disclosure and corporate cash holdings policies: Which macro-categories matter?

This study investigates the relationship between environmental disclosure practices and corporate cash-holding policies, emphasising the tunnelling risks minority shareholders face. Utilising the Global Reporting Initiative (GRI) as a framework for disclosure and applying fuzzy-set Qualitative Comparative Analysis (fsQCA) to a sample of 254 European firms listed on the STOXX Europe 600, the analysis identifies distinct configurations of environmental disclosure linked to varying levels of cash holdings. The results indicate that firms with high levels of cash holdings tend to engage in comprehensive environmental disclosure—especially concerning energy, water efficiency, emissions, waste, and supplier environmental assessments—which may diminish opacity and signal a reduced risk of expropriation. In contrast, firms with low cash holdings typically offer narrow or selective disclosures, generally limited to energy and emissions, while neglecting other significant areas such as materials, biodiversity, and supply chain impacts. This fragmented approach introduces opacity in corporate priorities and decision-making, potentially raising concerns among minority shareholders regarding hidden risks and misalignment between managerial actions and broader stakeholder interests. Throughout the sample, biodiversity is consistently underreported. By illustrating how the breadth of environmental disclosure interacts with cash-holding levels, this study highlights the role of transparency in influencing the perceived likelihood of cash being diverted for private benefit in contexts characterised by agency conflicts.