Abstract Background and Purpose: This study investigates the impact of environmental reporting on speed of adjustment and adjustment costs which is evaluated based on the ability of firms to adjust to target leverage level for non-financial firms listed in the Malaysian Stock Exchange (Bursa Malaysia). Design/Methodology/ Approach: The study selects Malaysian firms based on the contracting and political cost of the economy which is seen as a relationship-based economy. This in turn influences a firm’s ability to obtain external financing and thus has an important impact on capital structure decisions. In addition, the method employed allows for a direct measure on adjustment cost for firms. The current study utilises a dynamic regime switching model based on the DPF estimator to estimate rate of adjustment to optimal target levels based on the distinction of environmental reporting of public listed firms. The approach allows statistical inferences to control for potential serial correlation, endogeneity and heterogeneity concerns which accounts for firm specific characteristics. Results: The empirical findings suggest voluntary disclosure on environmental reporting increases a firm’s ability to access external financing at a cheaper cost as evidenced by a more rapid rate of adjustment. The findings are consistent across differing endogenous and exogenous factors indicating that these firms tend to face lower adjustment costs. Conclusion: The current study provides a direct measure on the ability of firms to adjust to target levels via security issues and repurchases in the capital markets. This in turn is a reflection of perceived riskiness and value from the investors’ point of view in an emerging market. Prior studies have focused on environmental reporting and equity risk premiums and have not evaluated the direct impact on firm value given that the trade-off theory of capital structure predicts that firm value is maximised at target i.e. optimal levels of leverage. This study addresses the current gap in the literature by evaluating the impact on firms’ value, based on the adjustment cost.

中文翻译：

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环境报告和目标杠杆调整速度：来自动态制度转换模型的证据

摘要背景和目的：本研究调查环境报告对调整速度和调整成本的影响，评估的依据是企业调整在马来西亚证券交易所（大马交易所）上市的非金融企业的目标杠杆水平的能力。 。设计/方法论/方法：该研究是根据经济的契约和政治成本选择马来西亚公司的，这种经济被视为基于关系的经济。反过来，这会影响公司获得外部融资的能力，从而对资本结构决策产生重要影响。此外，所采用的方法可以直接衡量企业的调整成本。当前的研究利用基于DPF估算器的动态制度转换模型，根据上市公司环境报告的差异，估算对最佳目标水平的调整率。该方法允许进行统计推断，以控制潜在的序列相关性，内生性和异质性问题，从而解决了公司的特定特征。结果：实证结果表明，自愿披露环境报告可以提高公司以较低成本获得外部融资的能力，这可以通过更快的调整率来证明。这些发现在不同的内生和外生因素之间是一致的，表明这些公司往往面临较低的调整成本。结论：当前的研究提供了直接衡量企业通过证券问题和资本市场回购来调整目标水平的能力的方法。这反过来又反映了从新兴市场投资者的角度看待的风险和价值。先前的研究集中在环境报告和股权风险溢价上，并且没有评估对公司价值的直接影响，因为资本结构的权衡理论预测公司价值会在目标即最佳杠杆水平上最大化。本研究通过根据调整成本评估对企业价值的影响来解决文献中的当前空白。先前的研究集中在环境报告和股权风险溢价上，并且没有评估对公司价值的直接影响，因为资本结构的权衡理论预测公司价值会在目标即最佳杠杆水平上最大化。本研究通过根据调整成本评估对企业价值的影响来解决文献中的当前空白。先前的研究集中在环境报告和股权风险溢价上，并且没有评估对公司价值的直接影响，因为资本结构的权衡理论预测公司价值会在目标即最佳杠杆水平上最大化。本研究通过根据调整成本评估对企业价值的影响来解决文献中的当前空白。