How Does Environmental Accounting Information Influence Attention and Investment?

44 Pages Posted: 16 Jun 2009 Last revised: 28 Mar 2014

See all articles by Hank C. Alewine

Hank C. Alewine

University of Alabama in Huntsville - College of Business Administration

Dan N. Stone

University of Kentucky - Von Allmen School of Accountancy

Date Written: December 7, 2009

Abstract

Purpose: Environmental consequences increasingly influence management strategy and choice. This study investigates the effects on attention and investment of: (a) incorporating environmental data into a balanced scorecard (BSC), called the sustainability balanced score card (SBSC), and, (b) the organization of environmental accounting information.

Design/method/approach: In a between-participant design, participants (n ≈ 95) chose from among two investments using BSCs. Participants were randomly assigned to one of three conditions: (a) no environmental data (control or BSC condition), (b) environmental data embedded within the traditional BSC (four-perspective SBSC) or (c) environmental data added to a BSC as a standalone fifth perspective (five-perspective SBSC).

Findings: Environmentally friendly investment was greater with the four-perspective SBSC than the traditional BSC. In addition, participants were most efficient, i.e., spent the least total time, and least time per data element examined, with the four-perspective SBSC. Finally, the time spent examining, and decision weight given to, environmental data were uncorrelated.

Research limitations/implications: Professional managers and accountants may have greater knowledge of environmental metrics than do students, who are the participants in this study; greater knowledge of environmental metrics may lessen the extent of display effects on judgments; hence, the results may not generalize to knowledgeable professionals. Future research can test this speculation by exploring the influence of knowledge on judgments in this context.

Practical implications: The form (i.e., organization) of environmental accounting data changed the allocation of attention while the presence of environmental accounting data changed participants’ investments; hence, both the presence, and form, of environmental accounting information matters.

Originality/value: This study is among the first to show differing influences from both the presence and organization of environmental accounting data on attention and investment.

Category: Research paper.

Keywords: Sustainability Balanced Scorecard, Environmental Accounting, Ecological Accounting, Investment Decision Making, Decision Making Strategies, Data Quality

JEL Classification: M46

Suggested Citation

Alewine, Hank C. and Stone, Dan N., How Does Environmental Accounting Information Influence Attention and Investment? (December 7, 2009). Available at SSRN: https://ssrn.com/abstract=1420883 or http://dx.doi.org/10.2139/ssrn.1420883

Hank C. Alewine (Contact Author)

University of Alabama in Huntsville - College of Business Administration ( email )

Huntsville, AL 35899
United States

Dan N. Stone

University of Kentucky - Von Allmen School of Accountancy ( email )

Lexington, KY 40506
United States
859-257-3043 (Phone)
859-257-3654 (Fax)

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