Carbon accounting, management quality, and bank performance in East Africa
-
Author(s)Haruna MaamaLink to ORCID Index: https://orcid.org/0000-0003-4943-5489
,
Shenaaz GaniLink to ORCID Index: https://orcid.org/0000-0002-8801-6079
-
DOIhttp://dx.doi.org/10.21511/ee.13(1).2022.10
-
Article InfoVolume 13 2022, Issue #1, pp. 114-125
- Cited by
- 495 Views
-
137 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Does it pay to report green activities? This question has dominated academic discussion and has further spiraled into the industry. Questions exist about the value relevance of carbon accounting, given that such practice is voluntary and consumes resources. The question becomes more legitimate when banks whose activities do not negatively affect the environment adopt carbon accounting. Given this perplexing phenomenon, the study examined the impact of carbon accounting on the performance of banks in East Africa. Moreover, the effect of management quality on such a relationship was analyzed. The study relied on eight years of integrated, sustainability, and annual reports of 79 banks in East Africa, collecting the carbon accounting data. A multiple regression estimation technique was employed to estimate the models. The study demonstrated that carbon reporting had a negative and insignificant relationship with the financial performance of banks. In addition, the study showed that management quality turned the relationship between carbon disclosure and firm performance positive, suggesting that the banks with high quality of management benefited financially from carbon reporting. The study concludes that carbon accounting does not benefit East African banks. However, banks that had high quality of management financially benefited from carbon accounting. The significant implication of these results is that banks can benefit from adopting carbon accounting but only when they have high management quality. This study contributes to the debate on the conflicting empirical findings on the value relevance of carbon accounting in Africa, which is scarce.
- Keywords
-
JEL Classification (Paper profile tab)M14, M40, M41
-
References45
-
Tables3
-
Figures0
-
- Table 1. Summary statistics
- Table 2. Correlation matrix and VIF
- Table 3. Regression results
-
- Albers, A., Collet, P., Benoist, A., & Hélias, A. (2020). Back to the future: dynamic full carbon accounting applied to prospective bioenergy scenarios. The International Journal of Life Cycle Assessment, 25(7), 1242-1258.
- Albitar, K., Hussainey, K., Kolade, N., & Gerged, A. M. (2020). ESG disclosure and firm performance before and after IR: The moderating role of governance mechanisms. International Journal of Accounting & Information Management, 28(3), 429-444.
- Ali, S., Zhang, J., Naseem, M. A., & Ahmad, F. (2019). Moderating role of ownership in relationship between CSRD and firm performance. The Journal of Developing Areas, 53(3), 213-229.
- Alsaifi, K., Elnahass, M., & Salama, A. (2020). Market responses to firms’ voluntary carbon disclosure: Empirical evidence from the United Kingdom. Journal of Cleaner Production, 262, 121377.
- Andrian, T. (2020). Linking Corporate Carbon Emission, Social Responsibility Disclosures and Firm Financial Performance. Test Engineering and Management, 83, 22356-22366.
- Ascui, F. (2014). A review of carbon accounting in the social and environmental accounting literature: what can it contribute to the debate? Social and Environmental Accountability Journal, 34(1), 6-28.
- Bai, X., & Chang, J. (2015). Corporate social responsibility and firm performance: The mediating role of marketing competence and the moderating role of market environment. Asia Pacific Journal of Management, 32(2), 505-530.
- Beeler, J., & Panter, J. (2018). Green house gases and carbon accounting. International Journal of the Academic Business World, 12(2), 59-65.
- Borghei, Z. (2021). Carbon disclosure: A systematic literature review. Accounting & Finance, 61(4), 5255-5280.
- Bowen, F., & Wittneben, B. (2011). Carbon accounting: Negotiating accuracy, consistency and certainty across organisational fields. Accounting, Auditing & Accountability Journal, 24(8), 1022-1036.
- Brander, M., Ascui, F., Scott, V., & Tett, S. (2021). Carbon accounting for negative emissions technologies. Climate Policy, 21(5), 699-717.
- Bui, B., & Fowler, C. J. (2019). Strategic responses to changing climate change policies: The role played by carbon accounting. Australian Accounting Review, 29(2), 360-375.
- Bui, B., Moses, O., & Houqe, M. N. (2020). Carbon disclosure, emission intensity and cost of equity capital: multi-country evidence. Accounting & Finance, 60(1), 47-71.
- Cardebat, J. M., & Sirven, N. (2010). What corporate social responsibility reporting adds to financial return? Journal of Economics and International Finance, 2(2), 20-27.
- Cherian, J., Safdar Sial, M., Tran, D. K., Hwang, J., Khanh, T. H. T., & Ahmed, M. (2020). The strength of CEOs’ influence on CSR in Chinese listed companies. New insights from an agency theory perspective. Sustainability, 12(6), 1-13.
- Corvino, A., Doni, F., & Martini, S. B. (2020). Corporate governance, integrated reporting and environmental disclosure: Evidence from the South African context. Sustainability, 12(12), 4820.
- Csutora, M., & Harangozo, G. (2017). Twenty years of carbon accounting and auditing–a review and outlook. Society and Economy, 39(4), 459-480.
- Datt, R. R., Luo, L., & Tang, Q. (2019). Corporate voluntary carbon disclosure strategy and carbon performance in the USA. Accounting Research Journal, 32(3), 417-435.
- Freedman, M., & Jaggi, B. (2005). Global warming, commitment to the Kyoto protocol, and accounting disclosures by the largest global public firms from polluting industries. The International Journal of Accounting, 40(3), 215-232.
- Gibassier, D., Michelon, G., & Cartel, M. (2020). The future of carbon accounting research: “we’ve pissed mother nature off, big time”. Sustainability Accounting, Management and Policy Journal, 11(3), 477-485.
- Guping, C., Safdar Sial, M., Wan, P., Badulescu, A., Badulescu, D., & Brugni, T. V. (2020). Do board gender diversity and non-executive directors affect CSR Reporting? Insight from agency theory perspective. Sustainability, 12(20), 8597.
- Hartmann, F., Perego, P., & Young, A. (2013). Carbon accounting: Challenges for research in management control and performance measurement. Abacus, 49(4), 539-563.
- He, R., Luo, L., Shamsuddin, A., & Tang, Q. (2022). Corporate carbon accounting: a literature review of carbon accounting research from the Kyoto Protocol to the Paris Agreement. Accounting & Finance, 62(1), 261-298.
- He, Y., Tang, Q., & Wang, K. (2016). Carbon performance versus financial performance. China Journal of Accounting Studies, 4(4), 357-378.
- Kasbun, N. F., San Ong, T., Muhamad, H., & Said, R. M. (2019). Conceptual Framework to Improve Carbon Performance via Carbon Strategies and Carbon Accounting. Journal of Environmental Management & Tourism, 10(8), 1918-1923.
- Keith, H., Vardon, M., Stein, J. A., & Lindenmayer, D. (2019). Contribution of native forests to climate change mitigation – A common approach to carbon accounting that aligns results from environmental-economic accounting with rules for emissions reduction. Environmental Science & Policy, 93, 189-199.
- Kolk, A., Levy, D., & Pinkse, J. (2008). Corporate responses in an emerging climate regime: The institutionalization and commensuration of carbon disclosure. European Accounting Review, 17(4), 719-745.
- Maama, H. (2021). Achieving Financial Sustainability in Ghana’s Banking Sector: Is Environmental, Social and Governance Reporting Contributive? Global Business Review.
- Maama, H., Akande, J. O., & Doorasamy, M. (2020). NGOs’ engagement and Ghana’s Environmental Accounting Disclosure Quality. In K. C. Yekini, L. S. Yekini, & P. Ohalehi (Eds.), Advances in Environmental Accounting and Management, 9 (pp. 83-106). Emerald Publishing Limited.
- Marlowe, J., & Clarke, A. (2022). Carbon Accounting: A Systematic Literature Review and Directions for Future Research. Green Finance, 4(1), 71-87.
- Ong, T. S., Kasbun, N. F. B., Teh, B. H., Muhammad, H., & Javeed, S. A. (2021). Carbon accounting system: the bridge between carbon governance and carbon performance in Malaysian Companies. Ecosystem Health and Sustainability, 7(1), 1927851.
- Pham, H. S. T., & Tran, H. T. (2020). CSR disclosure and firm performance: The mediating role of corporate reputation and moderating role of CEO integrity. Journal of Business Research, 120, 127-136.
- Ready, C. (2014). Environmental reporting guidelines: Including mandatory greenhouse gas emissions reporting guidance.
- Saini, N., & Singhania, M. (2019). Performance relevance of environmental and social disclosures: The role of foreign ownership. Benchmarking: An International Journal, 26(6), 1845-1873.
- Saka, C., & Oshika, T. (2014). Disclosure effects, carbon emissions and corporate value. Sustainability Accounting, Management and Policy Journal, 5(1), 22-45.
- Sharma, D., Bhattacharya, S., & Thukral, S. (2019). Resource-based view on corporate sustainable financial reporting and firm performance: evidences from emerging Indian economy. International Journal of Business Governance and Ethics, 13(4), 323-344.
- Sial, M. S., Cherian, J., Salman, A., Comite, U., Anh Thu, P., & Brugni, T. V. (2021). The role of carbon accounting in carbon management system: Empirical evidence from the coastal areas of the world. Journal of Public Affairs, e2795.
- Solikhah, B., Maulina, U., & Ntim, C. G. (rev.ed.). (2021). Factors influencing environment disclosure quality and the moderating role of corporate governance. Cogent Business & Management, 8(1), 1876543.
- Stechemesser, K., & Guenther, E. (2012). Carbon accounting: a systematic literature review. Journal of Cleaner Production, 36, 17-38.
- Steininger, K. W., Lininger, C., Meyer, L. H., Muñoz, P., & Schinko, T. (2016). Multiple carbon accounting to support just and effective climate policies. Nature Climate Change, 6(1), 35-41.
- Thistlethwaite, J. (2015). The politics of experimentation in climate change risk reporting: the emergence of the Climate Disclosure Standards Board (CDSB). Environmental Politics, 24(6), 970-990.
- Tuesta, Y. N., Soler, C. C., & Feliu, V. R. (2021). Carbon management accounting and financial performance: Evidence from the European Union emission trading system. Business Strategy and the Environment, 30(2), 1270-1282.
- Velte, P., Stawinoga, M., & Lueg, R. (2020). Carbon performance and disclosure: A systematic review of governance-related determinants and financial consequences. Journal of Cleaner Production, 254, 120063.
- Vitolla, F., Raimo, N., & Rubino, M. (2020). Board characteristics and integrated reporting quality: an agency theory perspective. Corporate Social Responsibility and Environmental Management, 27(2), 1152-1163.
- Wachira, M. M., Berndt, T., & Romero, C. M. (2020). The adoption of international sustainability and integrated reporting guidelines within a mandatory reporting framework: lessons from South Africa. Social Responsibility Journal, 16(5), 613-629.
-
The role of accounting in sustainable development
Inna Makarenko 
,
Alex Plastun
doi: http://dx.doi.org/10.21511/afc.01(2).2017.01
Accounting and Financial Control Volume 1, 2017 Issue #2 pp. 4-12 Views: 7573 Downloads: 4708 TO CITEIdeology of Sustainable Development and Sustainable Development Goals influence the transformation of business processes in the companies. Professional accountants are important part of this transformation. In this paper the role of accounting in Sustainable Development Goals achievement is discussed. Different approaches to structuring the role of professional accountants in Sustainable Development are investigated. Among them are types of roles that perform accountants, their professional functions, skills and competencies in the corporate environment. As the result a holistic vision of the role of accounting in sustainable development in the new economic conditions is provided.
-
Integrated reporting and financial performance of South African listed banks
Reon Matemane ,
Rozane Wentzel
doi: http://dx.doi.org/10.21511/bbs.14(2).2019.11
Banks and Bank Systems Volume 14, 2019 Issue #2 pp. 128-139 Views: 2742 Downloads: 536 TO CITE АНОТАЦІЯThe recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.
-
From the corporate social responsibility reporting to the integrated reporting: the case of Sabaf S.p.a
Problems and Perspectives in Management Volume 15, 2017 Issue #1 (cont.) pp. 150-157 Views: 2530 Downloads: 1043 TO CITE АНОТАЦІЯIn December 2013, the International Integrated Reporting Council (IIRC) published the International Integrated Reporting Framework.
The aim of the Framework is to provide the guiding principles and the content elements of an integrated report. The integrated report constitutes an evolutionary step in the corporate’s financial and non-financial communication, moving from the social responsibility reporting to the integrated reporting.
This practice is at the beginning in Europe and especially in Italy, where only a few listed companies have decided to face the multitude of challenges the integrated report implies.
Considering the relevance of such a new form of communication, the paper examines the main steps carried out by an Italian listed company moving towards the integrated report. The research has been conducted by adopting a qualitative case study approach, by focusing on Sabaf S.p.a, an Italian listed medium sized company belonging to the Star Segment. This company has been selected, because it was one of the first adopters of the integrated report among the Italian listed companies.
The study is built on data gathered through sites visits, structured interviews and company materials.
The paper examines Sabaf’s transition from the corporate social responsibility report to the integrated report, aiming at answering the following research question:
Why has Sabaf moved to integrated reporting? Which are Sabaf’s main steps towars the integrated report? How is the Sabaf’s integrated reporting process going?
The findings should be of interest to a number of parties including standard setters, firms, financial advisors, auditors and users of non-financial statements.
