Institutional determinants of carbon financial accounting practices
Kashyap, Varsha; Hooks, J.; Rahman, Md.; Bhuiyan, Md. B.U.
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Citation:Kashyap, V., Hooks, J., Rahman. A., & Bhuiyan, M. B. U. (2020). Institutional Determinants of Carbon Financial Accounting Practices Unitec ePress Occasional and Discussion Papers Series (2020/2). Unitec ePress. ISSN 2324-3635. Retrieved from http:// www.unitec.ac.nz/epress
Permanent link to Research Bank record:https://hdl.handle.net/10652/4966
This paper investigates how and why firms affected by Emissions Trading Schemes (ETSs) are financially accounting for carbon in a voluntary setting. Using institutional theory, the authors seek to identify the determinants of a firm’s decision to adopt a particular carbon financial accounting practice. We identify the recognition and measurement practices for carbon-emission allowances using data gathered from the annual reports of ETS-affected firms in Australia. These practices are identified in the five stages of carbonemission allowance transactions, namely, when these are: (1) received for free, (2) purchased, (3) used, (4) sold and (5) surrendered. Inconsistencies in carbon financial accounting practices are observed. The findings reveal that carbon-emission allowances are recorded as intangible assets, but most firms provide incomplete information on their carbon financial accounting practices. Firms also exhibit inconsistencies in specifying how they are ‘recognising’ and ‘measuring’ carbon-emission allowances. The results provide evidence of coercive (regulation) and mimetic (size, leverage and listing status) pressures being the main determinants of carbon financial accounting practice. The findings will help accounting policy-makers in understanding how and why ETS-affected firms financially account for their carbon allowances. This can assist the development of a uniform carbon financial accounting guidance. Given the few studies in the field of financial accounting of carbon emissions under ETSs, this research will also give meaningful insights to academics and researchers.
Keywords:Australia, ETS-affected firms, carbon-emission allowances, financial accounting of carbon emissions, accounting, sustainability accounting, sustainability reporting
ANZSRC Field of Research:150106 Sustainability Accounting and Reporting
Copyright Notice:Institutional Determinants of Carbon Financial Accounting Practices by Varsha Kashyap, Jill Hooks, Asheq Rahma and Md. Borhan Uddin Bhuiyan is licensed under a CreativeCommons Attribution-NonCommercial 4.0 International License.
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