Accounting for the Environmental Impacts of Texaco’s Operations in Ecuador: Chevron’s Contingent Environmental Liability Disclosures

39 Pages Posted: 14 Mar 2012

See all articles by Stacie Buccina

Stacie Buccina

affiliation not provided to SSRN

Douglas G Chene

University of Southern Maine - School of Business

Jeffrey Gramlich

Carson College of Business

Date Written: March 14, 2012

Abstract

This paper examines the disclosure of a contingent legal obligation that arose as a result of Texaco Inc.’s oil drilling and extraction activities in Ecuador. We examine Texaco’s and, after Texaco’s acquisition by Chevron in 2001, Chevron’s financial reporting and SEC disclosures pertaining to a lawsuit claiming damages related to the environmental effects of Texaco’s 30 years of operations in Ecuador. After a historical review of Texaco’s drilling and extraction activities in Ecuador, and the ensuing litigation that began in 1993, we consider U.S. accounting and reporting rules as they apply to Texaco and Chevron. Given these rules, we analyze the appropriateness and timing of Chevron’s disclosures related to the heretofore-unresolved litigation. The discussion employs legitimacy and stakeholder theories to explain Chevron’s disclosures.

Keywords: Environmental Liability, Chevron, Texaco, ChevronTexaco, Financial Disclosure, Ecuador, Environmental Remediation, Legitimacy Theory, Stakeholder Theory

Suggested Citation

Buccina, Stacie and Chene, Douglas G and Gramlich, Jeffrey, Accounting for the Environmental Impacts of Texaco’s Operations in Ecuador: Chevron’s Contingent Environmental Liability Disclosures (March 14, 2012). Available at SSRN: https://ssrn.com/abstract=2022362 or http://dx.doi.org/10.2139/ssrn.2022362

Stacie Buccina

affiliation not provided to SSRN ( email )

Douglas G Chene (Contact Author)

University of Southern Maine - School of Business ( email )

P.O. Box 9300
Portland, ME 04104
United States
207-780-4328 (Phone)

Jeffrey Gramlich

Carson College of Business ( email )

Wilson Rd.
College of Business
Pullman, WA 99164
United States

HOME PAGE: http://https://business.wsu.edu/research-faculty/institutes/hoops-institute/

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