Transparency of Financial Reporting on Greenhouse Gas Emission Allowances: The Influence of Regulation

Patricia Milanés Montero, Esteban Pérez Calderón and Ana Isabel Lourenço Dias
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Patricia Milanés Montero: Department of Accounting and Finance, University of Extremadura, Faculty of Economic and Business Sciences, 06006 Badajoz, Spain
Esteban Pérez Calderón: Department of Accounting and Finance, University of Extremadura, Faculty of Economic and Business Sciences, 06006 Badajoz, Spain
Ana Isabel Lourenço Dias: Department of Financial Accounting, Lisbon Polytechnic Institute/Lisbon Accounting and Business School, 1069-035 Lisbon, Portugal

IJERPH, 2020, vol. 17, issue 3, 1-25

Abstract: This study focuses on the transparency of financial reporting on emission allowances (EA) and greenhouse gas (GHG) emissions within the European Union Emissions Trading Scheme (EU ETS). In particular, the different accounting treatments adopted by standard setters and professionals were analyzed to evaluate the influence of regulation in the transparency of financial reporting on EA and GHG emissions. Based on a sample of 85 companies registered with the Portuguese, Spanish, and French National Plans of Allocation (NPAs), data collected from the annual reports were analyzed for the 2008–2014 period. The results were obtained based on descriptive, logistic regressions and panel data statistical techniques, and they show that better levels of transparency of financial reporting on EA and GHG emissions are conditioned by a variety of accounting policies, which compromises the comparability of the financial information. The adoption of the International Accounting Standards Board (IASB) standards set lead to a greater dispersion in the choice of the accounting approach and a higher probability of not disclosing any information, as well as adopting off-balance sheet policies. Therefore, the regulatory factor is a determinant of the level of transparency of financial reporting on EA and GHG emissions, contributing to reduce strategies of omission.

Keywords: EU ETS; Emission allowances; Greenhouse gas emissions; Transparency; Accounting regulation (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
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