Environmental social controls and capital investments: Australian evidence

Authors: Wood, Dorothy¹; Ross, Donald G.²

Source: Accounting and Finance, Volume 46, Number 4, December 2006 , pp. 677-695(19)

Buy & download fulltext article:

Price: $48.00 plus tax (Refund Policy)

Abstract:

Environmental social controls (ESCs) such as mandatory disclosure, regulations, subsidies, and stakeholder opinion are intended to improve firm environmental performance. This paper reports ESC importance to Australian financial managers in making capital investment decisions. A decision-making experiment showed managers to be most responsive to stakeholder opinion (42 per cent), followed by subsidization (26 per cent) and regulatory cost (22 per cent). Mandatory disclosure has very little influence (10 per cent). ESC interaction effects are limited so coordination of ESC policy is not a primary concern. High degrees of managerial self-insight suggest policy changes would be enhanced by close consultations with the managers involved.

Keywords: Capital budgeting; Environmental social controls; G31; Q56

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1467-629X.2006.00180.x

Affiliations: 1: School of Accounting and Business Information Systems, Australian National University, Canberra, 0200, Australia 2: Macquarie Graduate School of Management, Macquarie University, Sydney, 2109, Australia

Publication date: 2006-12-01