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INVESTOR REACTION TO A CORPORATE SOCIAL ACCOUNTING

INVESTOR REACTION TO A CORPORATE SOCIAL ACCOUNTING INTRODUCTION This study is an empirical investigation of the long term market response to corporate social responsibility accounting. The approach taken here is to choose only one social program of major importance, viz., pollution control expenditures. The major reason for choosing the pollution control program is that the sums of money required to meet this social responsibility voluntarily or as required by law, have been enormous. During the period 1972 - 77, the expenditures for pollution abatement and control amounted to $169.98 billion' (Rutledge, 1979). Similar expenditure for the period 1977-86; is estimated at $361.3 billion in 1977 dollars (Council on Environmental Quality, 1978). These sums represent expenditures for complying with the standards that existed in 1976, and may further escalate as the standards are tightened. An important aspect of pollution control expenditures is, in most cases that they do not produce income (except for the paper and chemical industries where the waste products can be recycled), giving rise to higher cost of production for the main-line products, increased non-productive asset base, and increased financing needs. The industry in general has raised questions about the wisdom of such expenditures (Denison, 1978; Hamrin, 1975; Sheridan, 1974; Wall StreetJoumal, 1978, http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Finance & Accounting Wiley

INVESTOR REACTION TO A CORPORATE SOCIAL ACCOUNTING

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References (9)

Publisher
Wiley
Copyright
Copyright © 1984 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0306-686X
eISSN
1468-5957
DOI
10.1111/j.1468-5957.1984.tb00054.x
Publisher site
See Article on Publisher Site

Abstract

INTRODUCTION This study is an empirical investigation of the long term market response to corporate social responsibility accounting. The approach taken here is to choose only one social program of major importance, viz., pollution control expenditures. The major reason for choosing the pollution control program is that the sums of money required to meet this social responsibility voluntarily or as required by law, have been enormous. During the period 1972 - 77, the expenditures for pollution abatement and control amounted to $169.98 billion' (Rutledge, 1979). Similar expenditure for the period 1977-86; is estimated at $361.3 billion in 1977 dollars (Council on Environmental Quality, 1978). These sums represent expenditures for complying with the standards that existed in 1976, and may further escalate as the standards are tightened. An important aspect of pollution control expenditures is, in most cases that they do not produce income (except for the paper and chemical industries where the waste products can be recycled), giving rise to higher cost of production for the main-line products, increased non-productive asset base, and increased financing needs. The industry in general has raised questions about the wisdom of such expenditures (Denison, 1978; Hamrin, 1975; Sheridan, 1974; Wall StreetJoumal, 1978,

Journal

Journal of Business Finance & Accounting – Wiley

Published: Mar 1, 1984

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