ENVIRONMENTAL ACCOUNTING REPORTING AND MANAGEMENT DECISION MAKING IN NIGERIA TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION Background to the Study Statement of the Research Problem The Research Objectives The Research Hypotheses Scope of the Study Relevance and Significance of the Study Limitation of the Study Operational Definition of Terms References CHAPTER TWO: LITERATURE REVIEW Environment Definition of Environmental Accounting and Environmental Management Accounting Relationship Between Management Accounting, Financial Accounting, Environmental Accounting and Environmental Management Accounting The Benefits and Challenges of Environmental Management Accounting (EMA) Environmental Standards Environmental Degradation Problems Caused by Human Activities in Nigeria Management Decision Making Corporate Environmental Reporting: An Emerging Issue in The Corporate World Conventional Financial Accounting and Reporting Model and Need for Environmental Accounting and Reporting Corporate Environmental Reporting Factors Influencing Corporate Environmental Reporting Corporate Environmental Reporting Guidelines Legislation/Statute on Environmental Reporting Environmental Reporting in Asian Countries Corporate Environmental Reporting: Indian Scenario References CHAPTER THREE: RESEARCH METHODOLOGY Introduction Research Design The Population and Sampling Sources of Data The Research Instrument Operationalization of Variables Model Specification and Analysis Plan CHAPTER FOUR: DATA ANALYSIS, PRESENTATION AND INTERPRETATION OF RESULTS 4.1 Introduction 4.2 Descriptive Statistics 4.3 Regression Analysis 4.4 Test of Hypothesis Discussion of Findings CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION Introduction Summary of Findings Conclusion Recommendations Bibliography Appendix CHAPTER ONE INTRODUCTION INTRODUCTION The deficit and degradation of natural resources, as well as the accidents related to environmental pollution emitted by multinational corporations have incited economical, political and social debates concerning these issues and generated significant concerns from many companies and governments. The industrial development, sustained by the economic and technological progress, has been criticized for its devastating impact on the environment, these companies having been urged to become responsible as far as their impact on the environment is concerned. In response, many companies have begun to report ecologic activities and environmental performance and these aspects fall under the attention of the company’s management, accounting professionals, researchers, regulation bodies and the media (Ienciu Alin, Muller Victor, Matis Dumitru (2011). During this past decade, the demand for reporting environmental information within the listed companies has increased dramatically (Beretta and Bozzolan, 2004). External users need relevant and credible information regarding the environmental performance of companies. Due to the fact that reporting environmental information remains voluntary at the international level, there are major differences as far as quality and quantity of environmental information reported by companies from different sectors and countries are concerned (Di Piazza, and Eccles, 2002). Referring to financial accounting Gray and Bebbington (1997) argued that”…there is something profoundly wrong about a system of measurement, a system that makes things visible and which guides corporate and national decisions, that can signal success in the midst of desecration and destruction”, considering that financial accounting is restricted to users with a financial interest in the company, denying the access to information by users who are interested in environmental performance of the company. So there are reasons why we can consider financial accounting inadequate or insufficient for reporting environmental information: it promotes financial performance to the detriment of environmental performance and the information supplied are mainly of financial and economic nature to the advantage of users presenting a financial interest to the company. This leads to restricting or excluding other categories of users regardless of the fact they are affected by the company’s environmental impact. Over time researchers and practitioners have proposed mechanisms and guidelines, such as Global Reporting Initiative Guidelines, Triple Bottom Line Reporting, United Nations Approach, UK Reporting Guidelines, Accounting for Externalities, Environmental Financial Statements, which can supplement financial accounting rules in providing an accurate image regarding the environmental performance of the company and responding the interests of users who have been directly or indirectly affected by the company’s environmental impact. At the international level, the most representative voluntary guidebook referring to environmental information reporting is the Global Reporting Initiative [GRI] Guidelines providing with a conceptual framework for environmental information reporting in a sustainable manner (GRI, 2006). Based on the environmental management accounting, this framework contains principles and guidance, qualitative characteristics of information and a series of parameters that reflect the company’s environmental performance. The purpose is to use these principles to eliminate the disadvantages of financial accounting, which provides financial information tending to favor certain categories of users presenting implications on the financial performance of the company. GRI Guidelines is considered the most complete framework of reporting sustainable information. In recent years, adverse environmental effect of economic development has become a matter of great public concern all over the world. Gradually, environment is becoming a much more urgent economic, social and political problem (Alok, Nikhi and Bhagaban, 2008). Accountant, as the prime custodian and light bearers of economic development, can no longer shut their eyes to the effect of environmental issues on business management, accounting, auditing and reporting system. Protection of environment and the potential involvement of accountants is becoming a common subject of discussion among the accountants all over the world. Now-a-days, accountant are expected to take a proactive role in the environmental protection process. Ultimately, corporate environmental accounting and reporting has been considered by the accountants as an important issue. It has now also become a “global issue” with a pressing need to harmonize accounting and reporting of environmental costs and liabilities. The global community considered it necessary to determine the best practice in accounting for environmental transactions and events in the financial statements and associated notes. Still date, accountants face the problem of how to place an “objective value” of the environmental impacts. Unfortunately, no one has developed an acceptable, objective and verifiable measurement technique. But, the problem is not outside the scope of accounting as because accountants are able to measure other ‘uncertain costs’. But, in fact, formulation of valuation, accounting and reporting technique is a great challenge to the accounting profession considering the corporate entity’s responsibility towards environmental protection (Alok, Nikhi and Bhagaban, 2008). From the foregoing scenario, the researcher is motivated to take a detailed review on the impact of environmental reporting on management decision making in Nigeria. STATEMENT OF RESEARCH PROBLEM In spite of the apparent policy shift towards increased use of environmental accounting reporting, to date there remains little systematic empirical evidence that environmental accounting reporting significantly increases decision making. Hence, this study is to investigate the impact of environmental accounting reporting on management decision making. The following are research questions raised: What is the relationship between environmental accounting report and profit after tax? What is the relationship between environmental accounting report and firm profitability? OBJECTIVES OF THE STUDY The objectives of the study are: To determine the relationship between environmental accounting report and profit after tax. To verify the relationship between environmental accounting report and firm profitability. RESEARCH HYPOTHESIS The following hypotheses have been formulated to serve as a base for this research; Hypothesis I Ho: There is no relationship between environmental accounting report and profit after tax. H1: There is a relationship between environmental accounting report and profit after tax. Hypothesis II Ho: There is no relationship between environmental accounting report and firm profitability. H1: There is a relationship between environmental accounting report and firm profitability. SCOPE OF THE STUDY This research work is an empirical study of the impact of environmental accounting reporting and management decision making. The population and sample of the study is some selected multinational companies in Nigeria in Niger Delta Region using a period of 2005 – 2010. This study will involve assessing the multinational companies in the discharge of their environmental responsibility as well as their environmental reporting. SIGNIFICANCE OF THE STUDY This research work on its conclusion, together with whatever solution or findings that may arise, will prove useful to some particular group of persons or otherwise for various reasons in accordance with their varying needs. Beneficiaries Stakeholders: This study will be important and beneficial to stakeholders of an organization to know the impact of environmental accounting reporting on management decision making. The Government: It will acquaint the government of the importance of environmental accounting reporting and how it should be properly managed. The public: This study will help to restore the lost confidence of the public as regard environmental accounting information. Academic/future researcher: Both academic and other future researchers in this similar subject matter will find it a useful source of learning and research. LIMITATION OF THE STUDY The problems encountered in the course of this research includes; Inadequate Study Materials: Research materials were of limited supply due to the practicality of the study. Where they were available; the cost involved in sourcing for them was very expensive. Lack of Access to Current Data: Most managements and staff of the establishment would not want to disclose important or relevant information about their organizations on this subject matter, except were such is permitted by law to be disclosed. Finance Cost: The cost involved in sourcing for the available materials and other necessary information was very high within the reach of the student researcher OPERATIONAL DEFINITION OF TERMS Environmental Accounting: Use of traditional accounting- and finance principles to compute the environmental costs of commercial and industrial decisions. Environmental reporting: Public disclosure by a firm of its environmental performance information, similar to the publication of its financial performance information. REFERENCES Alok K. P., Nikhil C. S., Bhagaban D. (2008), Corporate Environmental Reporting: An Emerging Issue in the Corporate World, Journal of International Business Management, Vol. 3, No. 12. Ienciu Alin, Muller Victor, Matis Dumitru (2011), Environmental reporting within the Romanian companies, International Journal of Energy and Environment, Issue 1, Volume 5. Beretta, S. Bozzolan, S. (2004) ”A framework for the analysis of firm risk communication”, The International Journal of Accounting, vol. 39 No.3.
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