Abstract
An experiment is used to investigate two important factors associated with environmental investment decision-making by managers: the regulatory regime in which the firm operates and the nature of environmental information used as a decision aid. Two regulatory regimes are examined, a command and control regulatory regime and a voluntary self-regulatory regime. Two accounting systems are contrasted, environmental management accounting and conventional management accounting, thereby providing a 2 × 2 experimental design for the empirical study. The paper considers environmental investment decision-making by different types of managers working in the Australian offshore petroleum industry. These empirical results indicate that environmental accounting information has a more significant influence on the willingness of managers to incorporate environmental considerations into investment decisions and to avoid future environmental risks, than does the type of regulatory regime.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Bibliography
Al-Tuwaijri, S. A., Christensen, T. E., & Hughes, K. E. (2004). The relations among environmental disclosure, environmental performance, and economic performance: a simultaneous equations approach. Accounting, Organisations and Society, 29(5,6) 447–471.
AMSA (Australian Maritime Safety Authority). (2005). Major oil pills in Australia. Retrieved October 27, 2005, from http://www.amsa.gov.au
APPEA (Australian Petroleum Production & Exploration Association). (1999). Senate environment, communications, information technology and the arts references committee inquiry into global warming. Canberra.
APPEA (Australian Petroleum Production & Exploration Association). (2003). Greenhouse response strategy: Commitments of the upstream oil and gas industry. Canberra: APPEA.
APPEA (Australian Petroleum Production & Exploration Association). (2004). The Australian petroleum exploration and production industry key statistics. Canberra: APPEA.
Australia and New Zealand Environment and Conservation Council (ANZECC). (1998). Towards sustainability: Achieving cleaner production in Australia. 16th Meeting: Hobart.
Baldwin, C. Y., & Clark, K. B. (1994). Capital-budgeting systems and capabilities investments in the U.S. companies after the Second World War. Business History Review, 68, 73–109.
Benidickson, J., Doren, G. B., & Olewiler, N. (1992). Greening the green light: Environmental regulation and investment in Canada. Toronto: McGraw-Hill, Ryerson.
Blamey, R., & Braithwaite, V. (1997). A social values segmentation of the potential ecotourism market. Journal of Sustainable Tourism, 5(1), 29–45.
Bromiley, P. (1986). Corporate planning and capital investment. Journal of Economic Behaviour and Organisation, 7(2), 147–170.
Burritt, R. L. (2004). Environmental management accounting: Roadblocks on the way to the green and pleasant land. Business Strategy and the Environment, 13(1), 13–32.
Carliss, B. Y, & Clark, K. B. (1994). Capital-budgeting systems and capabilities investments in U.S. companies after Second World War. Business History Review, 68(1), 73–110.
Dale, V. H., & O’Neill, R. V. (1999). Tools to characterise the environmental setting. In V.H. Dale, & M. R. English. Tools to aid environmental decision making (pp. 62–90). New York: Springer.
Earnhart, D. (2004). Regulatory factors shaping environmental performance at publicly-owned treatment plants. Journal of Environmental Economics and Management, 48(1), 655–681.
Eisenhardt, K. M., & Zbaracki, M. J. (1992). Strategic decision making. Strategic Management Journal, 13, 17–37.
Eisner, M. A. (2004). Corporate environmentalism, regulatory reform, and industry self-regulation: Toward genuine regulatory reinvention in the United States. Governance, 17(2), 145—167.
Elkington, J. (1999). The triple bottom line: implications for the oil industry. Oil & Gas Journal, 97(50), 139–141.
Fayers, C. (1999). Environment and investment: The role of personal investment choice in creating sustainability. Sustainable Development, 7, 64–76.
Fryxell, G. E., & Lo, C. W. H. (2003). The influence of knowledge and values on managerial behaviours on behalf of environment: an empirical examination of managers in China. Journal of Business Ethics, 46(1), 45–69.
Gunningham, N., & Rees, J. (1997). Industry self-regulation: An institutional perspective. Law and Policy, 19(9), 365–414.
Gunningham, N., & Johnstone, R. (1999). Regulating workplace safety systems and sanctions. Oxford: Oxford University Press.
Hart, S. (1997). Beyond greening: Strategies for a sustainable world. Harvard Business Review, 75(1), 66–76.
IFAC. (2004). International guidelines on environmental management accounting, exposure draft. New York: International Federation of Accountants.
Joshi, S., Krishnan, R., & Lave, L. (2001). Estimating the hidden costs of environmental regulation. The Accounting Review, 76(2), 171–198.
Locke, E. A., Schweiger, D. M., & Latham, G. P. (1986). Participation in decision-making: When should it be used? Organisational Dynamics, 16, 65–96.
Milne, M. J., & Chan, C. C. (1999). Narrative corporate social disclosure: how much of a difference do they make to investment decision-making? British Accounting Review, 31(4), 439–457.
Milne, M. J., & Patten, D. M. (2002). Securing organisational legitimacy: An experimental decision case examining the impact of environmental disclosure. Accounting, Auditing and Accountability Journal. 15(3), 372–405.
Mohammad, A., & Arnold, W. (1987). An examination of the effects of experience and task complexity on audit judgments. The Accounting Review, 62(1), 1–13.
Ness, K. E., & Mirza, A. M. (1991). Corporate social disclosure: A note on a test of agency theory. British Accounting Review, 23(3), 211–217.
O’Donovan, G. (2002). Environmental disclosure in the annual report: extending the applicability and predictive power of legitimacy theory. Accounting, Auditing and Accountability Journal, 15(3), 344–371.
O’Rourke, A. (2003). The message and methods of ethical investment. Journal of Cleaner Production, 11, 683–693.
Reyes, M. F. (2000). Environmental management accounting (EMA): Putting the right numbers in sustainable projects. Environmental management accounting network—Asia Pacific.
Sarker, T. K., & Burritt, R. L. (2005). Does self-regulation improve corporate ecological-efficiency? An empirical investigation into the Australian Petroleum Industry from 1996 to 2002. APPEA Journal, 45(1), 511–521.
Schaefer, A., & Harvey, B. (2000). Environmental knowledge and the adoption of ready made environmental management solutions. Eco-Management and Auditing, 7, 74–81.
Schaltegger, S., & Burritt, R. L. (2000). Contemporary environmental accounting: Issues, concepts and practices. Sheffield: Greenleaf.
Scott, R. W. (1995). Institutions and organisations. Thousand Oaks: Sage Publishers.
Shapiro, K., Stoughton, A., Graff, R., & Feng, L., (2000). Healthy hospitals: environmental improvements through environmental accounting. Boston: Tellus Institute.
Sharma, S. (2000). Managerial interpretations and organisational context as predictors of corporate choice of environmental strategy. Academy of Management Journal, 43(4), 681–697.
Swain, M. R., & Haka, S. F. (2000). Effects of information load on capital budgeting decisions. Behavioural Research in Accounting, 12, 171–198.
Tabachnick, B., & Fidell, L. (1996). Using multivariate statistics. New York: Harper Collins.
Thomas, A. (1995). Regulating pollution under asymmetric information: The case of industrial wastewater treatment. Journal of Environmental Economics and Management, 28(3), 357–373.
Tippet, J., & Leung, P. (2001). Defining ethical investment and its demography in Australia. Australian Accounting Review, 11(3), 44–55.
Trotman, K. (1996). Research methods for judgment and decision making studies in auditing. Melbourne: Coopers & Lybrand.
Wheelwright, S. C. (1986). Facilities planning: Reflecting corporate strategy in manufacturing decisions. In M. Kaufman (Ed.). The capital budgeting handbook. Homewood: Dow Jones-Irwin.
Wilmshurst, T. D., & Frost, G. F. (2001). The role of accounting and the accountant in the environmental management system. Business Strategy and the Environment. 10(3), 135–147.
Yishai, Y. (1998). The guardian state: a comparative analysis of interest group regulation. Governance: An International Journal of Policy and Administration, 11(2), 153–176.
Young, M. D. (1992). Sustainable investment and resource use: Equity, environmental integrity and economic efficiency. Carnforth: Parthenon Press and Paris, UNESCO.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2008 Springer Science + Business Media B.V.
About this chapter
Cite this chapter
Sarker, T.K., Burritt, R.L. (2008). An Empirical Examination of the Role of Environmental Accounting Information in Environmental Investment Decision-Making. In: Schaltegger, S., Bennett, M., Burritt, R.L., Jasch, C. (eds) Environmental Management Accounting for Cleaner Production. Eco-Efficiency in Industry and Science, vol 24. Springer, Dordrecht. https://doi.org/10.1007/978-1-4020-8913-8_26
Download citation
DOI: https://doi.org/10.1007/978-1-4020-8913-8_26
Publisher Name: Springer, Dordrecht
Print ISBN: 978-1-4020-8912-1
Online ISBN: 978-1-4020-8913-8
eBook Packages: Earth and Environmental ScienceEarth and Environmental Science (R0)