The disclosure of environmental conservation costs and its relation to eco-efficiency

Keun-Hyo Yook, Hakjoon Song, Dennis M. Patten and Il-Woon Kim

Sustainability Accounting, Management and Policy Journal, 2017, vol. 8, issue 1, 20-42

Abstract: Purpose - This paper aims to examine whether the amount of costs disclosed as relating to environmental controls is associated with environmental performance in terms of carbon-based eco-efficiency, and whether any relation supports voluntary disclosure theory or legitimacy theory arguments. Further, this paper attempts to determine whether the relations differ across the initial Kyoto Protocol period. Design/methodology/approach - In this study, the focus was on Japanese firms over the period from 2002 to 2012. Disclosed environmental control costs (capital expenditures and operating costs) were identified and eco-efficiency measures based on carbon emissions were calculated. Relations were tested for using regression models controlling for other potential impact factors. Findings - This study’s results indicate a negative relation between disclosed levels of environmental control costs and eco-efficiency performance measures, and, for two of our three eco-efficiency metrics, this is more pronounced over the Kyoto Protocol period. Research limitations/implications - These results support a legitimacy theory (as opposed to voluntary disclosure theory) explanation for the relation between the levels of disclosed environmental control costs and carbon-based eco-efficiency. Originality/value - This study is the first to explore how flexibility in cost classification may be used by companies to foster a disclosure strategy.

Keywords: Kyoto Protocol; Environmental disclosure; Eco-efficiency; Carbon productivity; Environmental conservation costs (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sampjp:sampj-07-2016-0039

DOI: 10.1108/SAMPJ-07-2016-0039

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