Following Patten (2005), we focus on corporate disclosure of environmental capital expenditure projections and spending, and address two separate issues related to the corporate use of manipulative disclosure. First, we investigate whether potential increases in oversight and accountability due to the passage of the Sarbanes-Oxley Act (SOX) in 2002 and the issuance of the Governmental Accountability Office's (GAO 2004) report on its investigation of corporate environmental disclosure may have induced firms to be less egregious in their use of overspending projections. Second, given the flexibility in the disclosure requirements, we explore whether, within the sample of companies providing projections of environmental capital spending, greater legitimacy exposures are associated with differences in the use of language within the disclosures. We find, first, that while the incidence and severity of over-projections of environmental capital spending decreased following the GAO (2004) report, the change was only temporary. Second, we document that companies with greater legitimacy exposures (based on firm size and environmental performance) are more likely to include more specific wording about the nature of the expenditures. However, we also find that the use of the more specific language is associated with a greater likelihood of having overstated projections, although we find no statistically significant differences in the average error amounts relative to firms with only vague language disclosure. We argue that these results suggest that the language specificity is, thus, being used in an attempt to enhance credibility via word choice, as opposed to being about improved transparency and accountability. Thus, making corporate environmental disclosure more meaningful would appear to require more specific standards on what, and how, information is provided.

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