Accounting for Carbon Emission Allowances in the European Union: In Search of Consistency

Black, Celeste

doi:10.1080/17449480.2013.834730

Cited by 32 publications

(33 citation statements)

References 4 publications

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“…Companies today face a daunting task of determining what and how much to disclose publicly about the risks and costs of their greenhouse gas emissions. On the one hand, investors and public interest groups worldwide call for more disclosure, greater uniformity, and more transparency (e.g., Black ; Coburn, Donahue, and Jayanti ). Companies and insurers, on the other hand, worry about the costs of disclosure, particularly from competitive disadvantage and liability exposure (e.g., Allen, Seaman, and DeLascio ; Weigand ); and others press for a more balanced consideration of the costs and benefits (e.g., Li, Richardson, and Thornton ).…”

Section: Introductionmentioning

confidence: 99%

The Relevance to Investors of Greenhouse Gas Emission Disclosures

Griffin

Lont

Sun

2017

Contemporary Accting Res

322

215

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This study finds that investors price firms' greenhouse gas (GHG) emissions as a negative component of equity value, and this valuation discount does not differ between firms that voluntarily disclose to the Carbon Disclosure Project (CDP) and nondisclosing firms. We derive the GHG emissions for nondisclosers from an estimation model that incorporates firm characteristics and industry. The finding that investors view CDP amounts and estimates of emissions as equally value-relevant suggests that equity values reflect GHG information from channels other than the CDP. An event study of investors' response to emission-related information in firms' 8-K filings further supports this finding. Economically, our results suggest that, for the median S&P 500 firm, GHG emissions impose a market-implied equity discount of $79 per ton, representing about one-half of 1 percent of market capitalization. * Accepted

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Section: Introductionmentioning

confidence: 99%

The Relevance to Investors of Greenhouse Gas Emission Disclosures

Griffin

Lont

Sun

2017

Contemporary Accting Res

322

215

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“…The skepticism about the usefulness of the recognition of EA and GHG emissions [2,21] stemmed in financial reporting relatively neglected [22]. Previous descriptive studies [3,[11][12][13][14][15], identified a multitude of accounting practices for the EU ETS transactions. Those can be distinguished into two basic approaches: Gross approaches (as prescribed by the IFRIC 3 or government grant approach identified by Ernst and Young [23], and net approaches (as prescribed by U.S. Generally Accepted Accounting Principles (GAAP).…”

Section: Financial Reporting On Ea and Ghg Emissions-an Overviewmentioning

confidence: 99%

“…Phase I was excluded as it was an experimental period of the EU ETS and also for companies to implement a number of procedures concerning financial reporting, that was much discussed. Previous literature [3,13] struggle to obtain financial data and therefore, it was chosen to commence the study with phase II, following the remaining descriptive studies [11,12,14,16]. It was considered all five years of phase II and the first two years of phase III, which includes the transition to auctioning.…”

Section: Sample and Datamentioning

confidence: 99%

“…However, the history of the regulation of financial reporting regarding EA and GHG emissions has been marked by the consecutive postponements of the IASB 2 of 25 that is still without an answer for an explicit treatment. This lack of international guidance has been subjected to extensive criticism in the literature, and it is viewed as the main reason to the omission of accounting information on EA and GHG emissions in the financial reports [10][11][12][13][14][15]. Nevertheless, the full International Financial Reporting Standards (IFRS) presents general principles that may be applied.…”

Section: Introductionmentioning

confidence: 99%

“…This scenario of duality between the international and domestic standard setters created some discrepancies in the adopted accounting treatments. Previous literature [3,[11][12][13][14][15][16] identified different accounting policies, and even, the absence of disclosure. The purpose of the present study focuses that those practices may be compromising the transparency of financial reporting on EA and GHG emissions (not to discuss which accounting treatment is more suitable).…”

Section: Introductionmentioning

confidence: 99%

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

Montero

Calderón

Dias

2020

IJERPH

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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.

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Accounting Standard-Setting for an Emission Trading Scheme: The Korean Case

2022

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This study examines the participation and interaction of relevant individuals in the process of developing an accounting standard for South Korea’s emission trading scheme (ETS). Despite the enormous accounting implications of such schemes, there is a paucity of research on the development and application of ETS accounting. Ulrich Beck’s and Anthony Giddens’s risk society framework is utilised to scrutinise the process of setting accounting standards—from the agenda-setting stage all the way to the final publication of the standard. In this case study, we take an interpretive approach in analysing the rich data collected through face-to-face interviews with prominent standard-setters, accounting experts and representatives of industry and government. Participant observation and relevant documents were also considered. The findings highlight the political nature of accounting standard-setting and identify the risks and responsibilities of the key agents in the process along with the means of sub-political action taken to influence decisions. We reveal that the agents involved in standard-setting attempted to balance their anthropocentric priorities with ecocentric responsibilities and prioritised the production of a standard with minimal impact on economic, reputational, and operational risk. Having authority as a standard-setter, referring frequently to precedents and, perhaps most importantly, engaging actively with the stakeholders throughout the process seem to have contributed to a widely accepted standard, which can serve as a benchmark for future attempts to factor in ETSs.

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Accounting for Carbon Emission Allowances in the European Union: In Search of Consistency

Cited by 32 publications

References 4 publications

The Relevance to Investors of Greenhouse Gas Emission Disclosures

The Relevance to Investors of Greenhouse Gas Emission Disclosures

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

Accounting Standard-Setting for an Emission Trading Scheme: The Korean Case

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