On The Effectiveness of Social and Environmental Accounting

Marc Orlitzky, Glen Whelan


This paper presents the broad outline of an instrumental theory of social and environmentalaccounting (SEA) at two levels of analysis: organizational and societal. We argue that, giventhe impact of signaling and transaction costs as well as various other costs and benefits of SEA,the level of SEA should be set so that marginal costs of SEA equal marginal benefits (at thefirm level) or marginal costs of SEA to society equal marginal benefits to society (in line withthe tenets of social efficiency). In this context, we summarize the overall empirical evidenceregarding the financial benefits of social and environmental disclosures for the reporting organization.Moreover, because all organizational decision making is embedded in politicalgovernance systems, we also highlight the importance of these systems for SEA and concludewith three suggestions for future research. Copyright © www.iiste.org

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Issues In Social and Environmental Accounting (ISEA) - ISSN: 1978-0591