Open AccessOn The Effectiveness of Social and Environmental Accounting
Author(s) -
Marc Orlitzky,
Glen Whelan
Publication year - 2007
Publication title -
issues in social and environmental accounting/issues in social and environmental accounting (isea)
Language(s) - English
Resource type - Journals
eISSN - 2460-6081
pISSN - 1978-0591
DOI - 10.22164/isea.v1i2.20
Subject(s) - transaction cost , corporate governance , marginal cost , economics , environmental accounting , context (archaeology) , cost–benefit analysis , public economics , set (abstract data type) , empirical evidence , accounting , business , environmental economics , microeconomics , political science , finance , paleontology , programming language , philosophy , epistemology , computer science , law , biology
This paper presents the broad outline of an instrumental theory of social and environmental accounting (SEA) at two levels of analysis: organizational and societal. We argue that, given the 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 the firm level) or marginal costs of SEA to society equal marginal benefits to society (in line with the tenets of social efficiency). In this context, we summarize the overall empirical evidence regarding the financial benefits of social and environmental disclosures for the reporting organization. Moreover, because all organizational decision making is embedded in political governance systems, we also highlight the importance of these systems for SEA and conclude with three suggestions for future research.