Environmental social controls and capital investments

Australian evidence

Dorothy Wood*, Donald G. Ross

*Corresponding author for this work

Research output: Contribution to journalArticle

14 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)677-695
Number of pages19
JournalAccounting and Finance
Volume46
Issue number4
DOIs
Publication statusPublished - Dec 2006

Keywords

  • Capital budgeting
  • Environmental social controls

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