Overview Of Environmental Disclosure In Literature View Accounting Essay

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One of the most significant current discussions in accounting philosophy is social and environmental disclosure. In recent years, social and environmental disclosure has received much attention by many researchers, academics, governments, and international organizations and bodies. Growing interest in social and environmental accounting is due to an expansion in the activities of companies and the impact of these activities on the environment surrounding companies; as well as the emergence of issues such as workers, trade unions, sustainability and the environment.Gray (2008, p. 8) reported that 'employee, employment and union issues experienced this attention in the 1970s and into the early 1980s. Environmental issues - together with sustainability - have experienced this attention since 1990'. During the stages of development of accounting literature, social and environmental disclose had appeared as a companion to social responsibility during the period 1960 and 1970. Environmental disclosure had not appeared separately yet, but was part of social disclosure.

The main aim of this chapter is to provide an overview of social and environmental accounting through a review of prior accounting studies and research. This chapter seeks to identify some significant gaps in the social and environmental accounting field in relation to research within the context of developing countries. Moreover, a review of EDPs in corporations operating in developing countries compared with corporations operating in developed countries is presented.

A historical overview of the development of environmental accounting

Over the past 40 years, accounting literature has witnessed a growth in studies addressing social and environmental accounting (SEA) (Parker 2011). It is worth noting that many researchers and accounting academics have devoted a lot of attention to studying social and environmental disclosure in companies in recent years. Parker (2011, p. 1) stated that 'SEA research is moving from the margins of accounting literature to centre stage' after it was considered underdeveloped at the beginning of the 1970s (Parker 2005). A number of issues arising during that period, such workers, employees and trade unions, contributed to the emergence of social studies, as well as pressure from stakeholders as a result of the expansion in the activities of companies. Therefore, there had been some studies conducted to explain the relationship between corporations and society, where Carmona et al. (2009) established the importance of studying environmental and social accounting to identify the relationship between organizations and society and thus determine the role of organizations in communities towards their responsibility regarding activities carried out by them and having an impact on the surrounding community. However, at the beginning of the seventies, there was not a significant change in accounting structures and environmental matters were not often identified separately at this time (Haider 2012; Parker 2011).

There is no doubt among accounting researchers that accounting is a social science which affects society and provides its services to broad categories of society. Therefore, social and environmental accounting seeks to achieve the same objectives as any other field of accounting where it seeks to measure and analyse the events in the social and environmental sphere of companies in order to provide information to stakeholders (Bebbington et al. 2007). Arvidsson (2010) asserted that social information provided by companies contribute to decision-making by stakeholders. This view is supported by Ball (2007) who claimed that organizations provide information about products, and the interests of consumers and the interests of employees, community activities and environmental impacts of stakeholders are part of the accounting function of social and environmental disclosure. Therefore, given the importance of environmental accounting and social accounting as a facet of accounting, many accounting researchers have examined the issue and sought to provide different definitions of SEA. Table 3.1 shows the principal definitions of social and environmental accounting in accounting literature.

Table ‎3: Principle definitions of social and environmental accounting in accounting literature



Gray, Owen & Maunders (1987, p. 9)

Social and environmental accounting is the process of communicating the social and environmental effects of organisations' economic actions to particular interest groups within society and to society at large.

Mathews and Perera (1996, p. 364)

At the very least, social accounting means an extension of disclosure into non-traditional areas such as providing information about employees, products, community services and the prevention and reduction of pollution. However, the term 'social accounting' is also used to describe a comprehensive form of accounting which takes into account externalities.

Gauthier et al. (1997, p. 1)

Environmental accounting is that aspect of accountancy which, while indistinguishable from financial and management accounting, deals more specifically with environmental concerns; that is, it is an aspect of the information system that enables data collection and analysis, performance follow-up, decision-making and accountability for the management of environmental costs and risks.

Schaltegger and Burritt (2000, p. 30)

Environmental accounting is a branch of accounting that deals with activities, methods and systems; recording, analysis and reporting; and the environmentally induced financial impacts and ecological impacts of a defined economic system.

Deegan et al. (2003, p. 3)

Environmental accounting is a broader term that relates to the provision of environmental-performance related information to stakeholders both within, and outside, the organisation

Environmental and social accounting has passed through several stages during its development. The first of these stages focused on social accounting (Hecht 2007; Špaček 2005), involving social issues, workers and social welfare (Hecht 2007; Mathews 2009; Seetharaman et al. 2010). Attention to these issues by social accounting was not at the expense of the economic interests of companies and their stakeholders, but sought balance between social issues and achieving the goals of stakeholders (Hibbitt et al. 2004). During the 1970s, many accounting researchers focused on the concept of socio-economic development, but this concept was later replaced by social accounting. Gray et al. (2012) asserted that attempts to explain corporate social accounting begun at the end of the 1970s in order to provide the same concepts as social accounting. In this context, Parker (2011) and (Parker 2005) established that the general trend of many studies between 1970 and 1980 focused on social accounting rather than environmental accounting. However, by the year 1980 accounting studies began to focus on environmental issues in many communities in developed countries (O'Connor 2006a). Kaya et al. (2007, p. 5) state that 'during the 1980s, the public stature of environmentalism had increased significantly and this was reflected in some authors broadening of the term 'social accounting' to 'social and environmental accounting'. Parker (2011) undertook a study that addressed social and environmental accounting where the results of the study showed that studies in environmental accounting become of interest too many researchers during the period between the end of the 1980sand the beginning of the third millennium.

Figure ‎2: Papers published relating to social and environmental accounting

During this period, the accounting literature focused on environmental issues in corporations by providing information related to environmental activities in annual reports of corporations (Ismail et al. 2012). During the 1990s there was increasingly growth in sustainable business and environmental awareness in corporations, as well as the roles and responsibilities of firms towards environmental protection (Parker 2011). Additionally, some corporations began to provide social and environmental reports in order to improve the image of their companies regarding social activities. Kaya et al. (2007) believe that providing social and environmental reporting, as well as economic performance, is an important way for companies to communicate their corporate responsibility to stakeholders and improve transparency and public trust. Moreover, accounting studies have adopted and used theories to explain the results of research on environmental accounting. (Cho et al. 2009) indicated that the use of theories such as political economy theory, legitimacy theory and stakeholder theory contributes to discussions regarding social and environmental practices.

The period post 2000 has witnessed an increased growth of studies in the social and environmental accounting field. During this period most studies cove social and environmental practices and seek to examine the faithfulness of social and environmental reporting practices, as well as using these studies as multiple sources of data (O'Connor 2006b). Moreover, social and environmental accounting is still used in the augmentation of theoretical frameworks (Deegan 2002). Social and environmental accounting fields have provided explanations on the different theoretical perspectives at the policy implementation level (Parker 2005). As well as this, the studies in this period sought to show determinants of social and environmental disclosure and the motivations behind decisions of social and environmental disclosure. Some studies indicate a firm's size as a factor of disclosure (Cormier et al. 2001), as well as ownership and its effect on the quality of social and environmental information (Guthrie et al. 2006; Rashid et al. 2009), while others such as Campbell et al. (2006) studied public profiles as disclosure drivers.

Furthermore, attention of stakeholders in organisations to social and environmental issues provides the motivation for many accounting researchers and academics to study whether the impact of stakeholders on accountability has a role on disclosure practices. Parker (2005) notes in his research that researchers in accounting fields tend to steep their research on social and environmental issues as a result of increased pressure on organizations from lobby groups, governments and other sectors of the business community.Some studies investigated stakeholders' needs, recognition and perceptions in relation to social and environmental disclosures (Belal & Roberts 2010; Huang et al. 2010). Other studies focused on the influence of non-government organizations (NGOs) on social and environmental disclosure (Deegan et al. 2006).

In conclusion, in recent years there has been a growing interest in environmental studies accounting to standardize disclosure practices. Owen (2004) reported that there are great efforts occurring at the present time by professional companies for the standardization of practice. For example, the Sustainability Reporting Guidelines have become commonly used in many companies.Kaya et al. (2007) report that currently there are more than 660 companies in 50 countries used Sustainability Reporting Guidelines. However, it is interesting to point out that most of the significant increase in studies relating to environmental or social accounting has focused on developed countries rather than developing countries, and has reflected positively on environmental accounting practices in developed countries such as America, Britain, Australia, Japan, federal EU countries and Canada (Belal et al. 2011; BelalKabir, et al. 2010a; Haider 2012; Ismail et al. 2012; Kaya et al. 2007).

Environmental disclosure and levels of disclosure

With the growing interest in environmental accounting in recent years, environmental reporting is at the forefront of developments in accounting disclosure. Rizk et al. (2008) reported that environmental accounting and reporting are not simply recent phenomena. Many studies observed that disclosure had increased steadily during the late 1980s. For example, in Spain, García-Ayuso et al. (2003) concluded that since the early 1990s, Spanish firms have witnessed a significant increase in environmental reporting. Moreover, in another study conducted on US firms by (Holland et al. 2003), they found that environmental disclosure in annual reports has increased since 1989. However, this increase in providing environmental information is not limited to a particular country, but has occurred on a global level. Moneva et al. (2000, p. 14) state: 'We have found that environmental information has significantly increased at the global level'. Additionally, a study by KPMG (2002) to investigate disclosing environmental information, which included 19 countries, indicated that the practice of providing environmental information has increased among most surveyed firms (García-Ayuso et al. 2003). Thus, it can be said that environmental disclosure has increase worldwide since 1990 (García-Ayuso et al. 2003; Parker 2011). It is also worth noting that the number of organisation which provides environmental disclosure has increased in many countries as pressure increases from many interest groups to provide environmental information.

Many studies conducted on environmental disclosure in companies indicate that the number of companies providing environmental information has steadily increased in many countries, especially in developed countries.Jose et al. (2007) also concluded that there has been an increase in the number of companies providing environmental disclosures. Moreover,Suttipun (2012, p. 1) stated that 'A significant increase in the number of companies providing environmental disclosures in their annual reports and other communication media in the last two decades has been reported'. Likewise, several other studies indicated an increase in the number of companies providing environmental information, especially after the oil spill incident. Studies have noticed an increase in the disclosure of a number of oil companies, especially those operating in environmentally sensitive industries (Ahmad et al. 2003; Kolk 2003). On the other hand, the increase in environmental disclosure and the number of companies involved are impacted by several factors, including pressure on companies from various interest groups. In this respect, governments of many countries have exerted pressure on companies to direct more of their efforts toward environmental protection. For example, the UK government has recently claimed that environmental reporting is deemed to be crucial in corporate reporting and companies must now report essential environmental issues in their annual reports and accounts under the amendment of the Companies Act 2006 (Sun et al. 2010). In light of this, there has been an increase in the number of countries (e.g. Japan, Denmark, New Zealand, and The Netherlands) that have passed regulations requiring some sort of public disclosure of corporate environmental information (Jose et al. 2007; Kolk 2003). Therefore, it has to be recognized that it is expected to improve EDPs as a result of this increased pressure on companies. Yet, there are other pressures besides governmental pressure contributing to the response of organisations in offering environmental information.

The increased demand for corporate environmental information (such as the form of corporate environmental responsibilities from non-governmental actors and other parties) has stimulated the demand for disclosure. Many organizations responded to pressures in order to meet the requirements of all parties, including stakeholders, environmental protection groups, and international organizations where they exercise political and legal pressure and economic sanctions on companies to urge them to adopt practices that will protect the environment. According to Cormier et al. (2005b, p. 4), 'public pressures directly influence the level of corporate environmental disclosure'. Similarly, (Elsakit et al. 2012) and Cormier et al. (2005b) reported that environmental disclosure is seen as a response to the pressure exerted by various stakeholders on corporate managers with respect to environmental performance. In support of stakeholders exerting pressure, in findings by KPMG (2005, p. 140), their analysis shows that the 'majority of disclosures made were around the motive of stakeholders' concern'. On the other hand it has to be recognized that pressures contribute to greater attention to environmental issues in countries in terms of formalised environmental performance of companies. Qian et al. (2011) purport that governments have played an encouragingly role in the establishment of appropriate management systems seeking to formulate and plan environmental policies aimed at achieving environmental goals.

In conclusion, it can be said that environmental disclosure has recently witnessed growth in published environmental reports and information related to environmental issues in annual reports. However, pressures on companies should not be exerted solely to increase the overall level of disclosure, but disclosed information and related environmental issues must be value-adding for the user of the information. Additionally, an increase in the production of reports on environment issues and the information contained therein should contribute positively to the quality and quantity of information disclosed. Supporting the study, it can be said that levels of disclosure differ between countries, especially in developed countries that have experienced a more significant growth in the level of environmental disclosure than developing countries.

In the social and environmental literature, many researchers have conducted studies on levels of disclosure, whether in one sector in a country or different sectors, as well as levels of disclosure across countries. According to Tilt (2001a), during the past thirty years many studies have examined the level of disclosure and researchers have agreed that disclosure has gradually increased in corporate annual reports. This is reinforced by Campbell (2004) who conducted a study covering 27 years from 1974 to 2000, concluding that disclosure had increased in UK companies but it increased at a faster pace in the period between 1980 and 1990. The increase in the level of environmental disclosure in corporations may be due to accidents occurring and their effect on the environment or the emergence of legislation from governments requiring companies to disclose. Patten (1992) and Heflin et al. (2011) found that the level of disclosure in the oil companies increased after oil accidents that are collisions oil tanker Exxon in Alaskan and the oil spill from the drilling platform in the Gulf of Mexico

Further, environmental disclosure may be different in terms of level and content. This difference may be between firms in the same country or between countries. Sen et al. (2011) indicate that the level of disclosure of environmental information varies across industries and that information in annual reports is found to be more qualitative than quantitative.Brammer et al. (2004) and Brammer et al. (2006) detected significant variation in environmental disclosure across sectors in the UK. Furthermore, levels of environmental disclosure in large companies and in companies operating in environmentally sensitive industries may be higher. In terms of the role of legislation in increasing the level of disclosure,Hibbitt et al. (2004) noted in their study that the European countries took a prominent place among the countries of the world in terms of the development of standards required for corporate environmental disclosure.

Studies conducted in recently indicated that disclosure differs between countries. (Ionel-Alin 2012), in his study conducted in 27 countries from European Union, concluded that there were significant variations in environmental disclosure between countries in accordance with some factors. In addition, Holland et al. (2003) found that in both the US and UK, environmental reporting practices increased as a result of increases in the volume of environmental legislation, regardless of some of the determinants of culture and legality-which will be addressed in detail later.Buhr et al. (2001) pointed out that the natural Canadian society adopted the production of a higher level of environmental disclosure more so than the American society, especially in environmental reports.

In summary, environmental reporting and levels of disclosure continues to represent the attention of researchers in the field of environmental accounting. However, studies addressing this subject suggest that differences exist in the preparation of environmental reports and the levels of disclosure between countries; and even between the same industrial sectors in one country. This is probably due, in part, to the fact that companies located in different countries have varying regulatory and cultural environments and report to many dissimilar groups of stakeholders.

Environmental disclosure across countries

There is general consensus among accountants and academics that financial reporting differs between countries according to accounting standards in each country (Ding et al. 2007; Jindrichovska 2004). Therefore, accounting researchers who conduct studies on social and environmental disclosure find that, due to the various determinants in each country, social and environmental disclosure varies between countries. These determinants depend on the stages of economic development, culture, and political life of a country (Cormier et al. 2005a). Williams (1999) found that national culture and PCS are important determinants in determining differences relating to voluntary environmental and social accounting between countries. Conversely, other studies suggest size, profitability, industry, country of ownership, reporting country, capital intensity, senior executive attitudes and company age are determinants for environmental disclosure in many countries (da Silva Monteiro et al. 2010; Gao et al. 2005; Liu et al. 2009). Therefore, many researchers have insisted that environmental disclosure has become a global issue throughout the world, but there is still tremendous variation in the types and amount of information disclosed between countries.

In recent years, developed countries have given greater attention to environmental accounting, in particular corporate environmental disclosure (Jindrichovska 2004). Many researchers in developed countries such as the USA, the UK, Australia, Japan, Canada and other European countries have addressed the subject of environmental disclosure from various aspects (Brammer et al. 2006; Cormier et al. 2003; Parker 2011; Welford 2005). Some studies have addressed the relationship between environmental disclosure and environmental and financial performance (Al-Tuwaijri, Sulaiman A. et al. 2004), while other studies have examined determinants of disclosure (Gamerschlag et al. 2011; Gao et al. 2005; García-Ayuso et al. 2003). Other researchers have tried to provide comparisons between countries (Holland et al. 2003). In contrast, compared to developed countries few studies have been conducted on developing countries (Ahmad et al. 2005; Belal et al. 2011; Elijido-Ten 2009).

Environmental disclosure practice in developed countries

Environmental issues and problems arising from the environmental activities of companies have gained the attention of societies in the developed countries more than developing communities over the past few decades. The accounting studies that addressed environmental issues have focused on developed countries such as the UK, the USA, Australia, Japan, Canada and the European Union. Growing interest in environmental issues by companies in developed countries has contributed to an increase in the amount of environmental information in annual reports of companies. Mitchell et al. (2006) also found that the amount of environmental information has increased in annual reports, as well as establishing that many corporations are starting to issue voluntary independent environmental statements in their annual report.

In North America, the United States and Canada, attention to environmental accounting has witnessed a boom in growth over recent decades. U.S. companies are giving special attention to the environment in terms of identifying environmental impacts on commercial activities in public and private sectors and trying to reverse these effects via their annual reports (Aerts et al. 2008). In addition, governments and professional organizations in North America have played a significant role in encouraging companies to increase disclosure. In 1993, a workshop was organized with a group of experts, academics, businessmen, professional organizations, and non-profit organizations in order to develop an action plan to encourage and motivate businesses to fully understand the importance of environmental accounting, including environmental costs and how to make corresponding decisions (Hopwood 2009; Sawani 2009b). Furthermore, Kraft (2011) reported that since the 1980s environmental information disclosure has emerged in the United States and environmental performance varies widely among the fifty states of the USA.

As for the UK, Campbell (2004) indicated in his study covering a period of 27 years from 1974 to 2000 that the amount of disclosure in companies has increased over time, where all companies have paid attention to the level of disclosure as of late 1980 (see figure 3-2). Moreover, Hasseldine et al. (2005) concluded in their research on U.K. firms, that disclosure is not directly related to the quality of actual performance in order to disclose environmental information. Further, another study including firms in the U.K. showed that the rate of environmental information disclosed increased among UK companies (Brammer et al. 2004, 2006; Brammer et al. 2008). On other hand, Brammer et al. (2006) examined the voluntary environmental disclosures made by a sample of large UK companies during 2000. Their findings indicated to that the quality of disclosures is positively associated with firm size and corporate environmental impact. Furthermore, Salama et al. (2012) proved that U.K firms have paid considerable attention to the amount of environmental information disclosed. His study was conducted in 1999 and included 169 firms. Findings show that 138 (out of 169) companies disclosed environmental statements (81%).

Similar to studies conducted in other European countries, an early response to corporate environmental reporting practices in Portuguese companies has been witnessed since the 1990s. da Silva Monteiro et al. (2010) concluded that the extent of environmental disclosure has increased, as well as the number of Portuguese companies that disclose environmental information-although the level of environmental information disclosed is low according to a study of 109 large firms operating in Portugal during the period 2002-04.

Figure ‎2: Mean environmental disclosure volumes in U.K firms

Source: D. Campbell / The British Accounting Review 36 (2004, p.111).

German corporations also have positive environmental and social disclosure where companies from 'polluting industries' tend to have higher levels of environmental disclosure (Gamerschlag et al. 2011). Ionel-Alin (2012) studied environmental reporting within European countries. In his study, the authors analyze factors that explain environmental disclosure practices across 27 European Union Countries. This study concluded that in order to increase the quantity and the quality of environmental disclosure at the European Union level, environmental disclosure should be mandatory.

In an Australian context, the attitudes of all sections of society including investors, employees and environmentalists towards the environment contribute to an increase in environmental awareness. Tilt (2001a, p. 1) stated that 'Over the past twenty or so years interest in the relationship between business and the environment has grown dramatically, mirroring the increasing importance of the environment to broader society'. Interest in environmental disclosure in the Australian context has witnessed a significant increase by companies disclosing during the period 1980 to 1991 (Deegan et al. 2009). In addition, there has been an increase in environmental reporting by governments and corporations.Lynch (2007) found that environmental reporting in Australian state government departments increased during a five year period from 200 to 2005. It is relevant to point out that the use of separate environmental reports has increased and recommendations have been put forth to change the direction of environmental disclosure research (Cowan et al. 2005; Tilt 2001b). In a recent study by Rao et al. (2012) on 100 Australian firms listed on the Australian Stock Exchange, they concluded that environmental reporting in Australia is associated with positive corporate governance attributes; and 96 firms out of 100 had some level of environmental reporting.

In Japan, Stanwick et al. (2006) examined environmental disclosure in Japanese corporations during the period 1997 and 2005. This study covered 30 firms and results indicated that all companies had increased environmental disclosure during the years of the study. In addition, the highest level of environmental disclosure was in consumer product firms, whereas heavy manufacturing firms registered the lowest level of environmental disclosure. Moreover, Hirayama et al. (2001) established that foreign environmental guidelines have contributed to increases in environmental disclosure in Japan year by year. In this context, the authors concluded that the number of companies presenting environmental reports has increased year by year-where companies publishing environmental reports increased from 236 in 2000 to 297 companies in 2001.

Research within the context of a developing country

Over the last twenty years, most of the studies conducted in developing countries indicate that the level of environmental disclosure in developing countries is still low. Research conducted between the 1990s and 2000s did not contribute to social and environmental accounting literature adequately. Supporting this view, (Haider 2012) and (Islam 2010) and (Islam 2010) concluded that corporations operating in developing countries provide insufficient information and poor quality information regarding environmental issues in their annual reports. Further, Buniamin (2012) mentioned that the quantity and quality of social and environmental disclosure was inadequate in three developing countries.

The past decade has seen a boom in studies on environmental issues in companies and the extent of disclosure in annual reports or environmental reports, but these studies show that EDPs are very low, general, and descriptive in nature in the developing countries (Belal 2001; Belal et al. 2011; Haider 2012; Obeng-Nyarko et al. 2011; Sumiani et al. 2007). However, although EDPs are still inadequate compared with western countries including Australia, there are observed trends in some developing countries about a slight improvement in the number of studies on the disclosure of environmental accounting(Ahmad et al. 2011; Haider 2012; Ratanajongkol et al. 2006; Sumiani et al. 2007). In short, studies which addressed the subject of environmental disclosure indicate some reasons for EDPs such as improved corporate reputation and image, managing powerful stakeholders, sustaining competitive advantage and legitimizing corporate activities to society(Belal et al. 2007). Conversely, absence of legal requirements, lack of stakeholders' demands, high costs rather than benefits, attitudes relating to secrecy, competitors' poor performance, non-consideration of performance measurement, poor performance and fear of bad publicity are reasons for non-disclosure (Belal et al. 2011; Belal et al. 2007). Furthermore, these studies have focused on general descriptions of corporate social and environmental disclosure practices. Thus, consistent with the findings of research in developing countries, prior research in the context of developing countries shows that corporations disclose limited amounts of social and environmental information (Belal 2008). Therefore, in order to understand the findings of the previous research on social and environmental disclosure in organizations, it is worth providing a brief review of some relevant studies within the context of developing countries.

Elijido-Ten (2009), Smith et al. (2007) and (Haniffa et al. 2005) conducted research about social and environmental disclosure accounting across Malaysian companies. These studies focused on environmental disclosure in annual reports in the context of Malaysian corporations. The results of these studies indicate that Malaysian corporations show varied disclosure between firms according to different variables such as type of industry, size and corporate governance. In another study related to Malaysian firms it was concluded that larger companies and companies in environmentally sensitive areas published more information and provided higher quality disclosure. Companies with high levels of quantity environmental reporting also having a high level of quality environmental reporting (Buniamin 2010). In a recent study in Malaysia,Buniamin et al. (2011) found that environmental reporting is low with only 28% out of 243 of the companies disclosing environmental information.

The situation is similar in China and environmental disclosure studies need to study the situation in-depth in the future, although existing studies have sought to study most determinants concerning EDPs (Kuo et al. 2011; Zeng et al. 2010). Other researchers have noted in their studies that the environmental reports of companies are still in the early stages and with respect to the preparation of environmental reports, research results point out it is predominantly non-mandatory (Fugui, L. et al. 2008; Xiao 2006; XIAO et al. 2004). However, although environmental reporting in China is uncommon, governmental organisations and other public agencies contribute somewhat to encouraging the use of environmental information by users such as financial institutions and investors (Fugui, Li et al. 2008).

Regarding companies in Bangladesh, most studies conducted recently indicate that the level of environmental disclosure is still fairly low. Belal (2001) used secondary data in order to study social and environmental disclosure in publicly traded companies in Bangladesh. In this study, the researcher indicated that the percentage of the average total number of social and environmental disclosures in annual reports of a sample was 0.5 percent. Hossain et al. (2006) conducted a study about environmental disclosure in annual reports of 150 firms for the year 2002-2003. Results show that companies in Bangladesh appeared to have the lowest levels of social and environmental disclosure. Moreover, BelalKabir, et al. (2010b) examined the nature and extent of corporate environmental disclosure in Bangladesh. Their studies included annual reports of the 100 largest firms for the year 2008. The main finding of this study indicated that the level of environmental and climate change disclosures is very low in Bangladesh Results of analysis showed that 91% of companies disclosed only one item in their annual report, namely, 'energy usage'-which is a mandatory requirement.

Concerning Thailand, Suttipun et al. (2012b) maintain that few studies relating to environmental disclosure have been conducted in the context of Thailand. Kuasirikun et al. (2004) found that there was a slight increase in environmental disclosure by Thai companies during the years 1993 and 1994 where he examined the annual reports of 63 Thai firms in 1993, and 84 in 1999. Along similar lines, Ratanajongkol et al. (2006) conducted a study of the 40 largest corporations during 1997, 1999 and 2001. The findings from this study indicate that environmental disclosure decreased over the study period. Furthermore, Thai firms provide environmental reports only when it is mandatory (Suttipun et al. 2012b).

As for environmental accounting studies in African countries, it should be borne in mind there is a lack of available references related to African countries. Findings from the few available studies indicate that environmental disclosure there is still in its early stages, as is the case in Asian countries. Studies conducted in African countries indicate that attention to environmental accounting is still poor compared to developed countries (Coetzee et al. 2011b; Dawkins et al. 2008; De Villiers et al. 2006; Ngwakwe 2009; Owolabi 2010; Uwalomwa et al. 2011a). Coetzee et al. (2011b) reported that the levels of disclosure have not received particular interest from companies operating in South Africa, although there is a significant increase in social concerns in terms of employee safety and stakeholder scrutiny in recent years. Uwalomwa et al. (2011b) recommend that in order to develop the themes of social and environmental disclosure, evidence should be presented to provide the foundation for improving environmental information disclosures among companies. Ebimobowei (2011) concluded that companies should adopt social accounting as a moral duty. In addition, the development of legislation for companies to disclose social accounting information is required. As well, professional accounting bodies in countries such as Nigeria should collaborate to expand research into social accounting.

In another study conducted on companies in Ghana, Obeng-Nyarko et al. (2011) indicate that there are few companies that have a social and environmental report, while others include social aspects in their annual reports. Further, De Villiers et al. (2006) provided data about environmental disclosure using content analysis for annual reports of corporations in South Africa. They indicated that in the first three years of the study period (the period of study is nine years) they had witnessed an increase in environmental disclosure-unlike the last years of the study period. Moreover, there was a difference between general and specific disclosure information. The general and specific disclosure information had increased between 1194 and 1999, and specific disclosure information had decreased five times more than the decline in disclosure of general information. Authors used the legitimacy theory to interpret the results of their study and the motives behind the disclosure of social and environmental practices in developing countries.

Environmental disclosure in the Arab region

Unlike other countries of the world, social and environmental research in Arab countries is still scarce compared with the rest of the world, including developing countries. O'Connor (2006a) reported that published studies according to the regions of the world indicated that the Middle East is the lowest among the regions of the world in published studies dealing with environmental issues (see figure 3). However, during the current decade some research has been conducted in Arab countries to attempt to fill a gap in accounting literature in regard to environmental issues.

Figure ‎2: Country of Origin of Published Studies (O'Connor, 2006:16).

In middle east and north Africa, Jahamani (2003) studied annual reports of Jordanian firms and UAE firms in 1998. The findings indicate that only 9 and 11 companies respectively presented environmental disclosures in annual reports out of 86 and 94 surveyed firms in Jordan and the UAE respectively. In another study conducted in Qatar, Al-Khater et al. (2003) examine different aspects of corporate social responsibility disclosure according to perceptions of various user groups. They concluded that the inclusion of corporate social and environmental disclosure in annual reports would reflect social responsibility to the public, and companies seek to justify their existence within society by highlighting the social responsibility of the company in their reports. These results confirm the low level of disclosure in companies in the developing world, including companies in the Arab region. The results of a study presented on environmental reporting in UAE companies by Jahamani (2003) showed that only 12 percent of the companies in the UAE issued environmental reports. The results of the low level of disclosure in companies in the developing world include companies in the Arab region. In Libya, Ahmad, Nasir (2004) conducted a study on environmental disclosure of 18 companies from major industrial companies in Libya and the results indicated that there was no evidence of environmental disclosure in annual reports of industrial companies in Libya.

Kamla (2007) conducted a study in nine Arab Middle East countries to examine the volume, quality and nature of social reporting practices in the annual reports of 68 companies. The findings indicated that only 10 companies, 15% of the sample, provided some form of environmental information. In addition, most disclosed information related to employee issues. In another study conducted in the Egyptian context, Rizk et al. (2008) studied corporate social and environmental reporting practices of Egyptian corporate entities. Findings of the study indicate a significant variation regarding social and EDPs in 60 companies operating in industrial segments. The researchers also mentioned that reviews of disclosure practices in different parts of the world are always welcome and are arguably somewhat limited in developing countries.

Furthermore, Hossain et al. (2009) and Naser et al. (2006) conducted studies in Qatar regarding environmental disclosure, including companies listed in Doha Securities Market. These studies concluded that there are variations in corporate social disclosure in the sampled Qatari companies. It is also indicated that disclosure is associated with firm size measured by the firm's market capitalization, business risk measured by leverage and corporate growth. In addition, the findings indicate that age, size, complexity, and assets-in-place are significant and other variable profitability is insignificant in explaining the level of voluntary disclosure.

During 2010, a study conducted by Elsayed et al. (2010) found that 55 out of 100 Egyptian corporations provided environmental information. In KSA, Al-Gamrh (2010) concluded that the level of disclosure in the annual reports of 93 companies surveyed is very low. Results of the study conclude that only one company disclosed all items of disclosure (the study included 25 items of environmental and social disclosure); while another 13 companies did not record any disclosure items. In 2011, Al-Janadi et al. (2011) investigated annual reports for the available financial years 2006 and 2007 in KSA and the UAE. They ascertained that the level of voluntary disclosure is low, with an average of approximately 36 per cent for the whole sample of companies. Voluntary disclosure was found to be lacking for most of the items of social and environmental information. In addition, the results of Ahmad et al. (2011) research confirmed the notion that a small increase incorporate environmental disclosure occurred in Libya between 2001 and 2007 compared to a study conducted during the period 19982000.

Furthermore, in Jordan, Islam (2011) examined the level of environmental disclosure in Jordanian firms using a sample of 60 companies in the manufacturing and service sectors. Results refer to 85% of the companies, in one way or another, disclosing social and environmental information. Islam (2011) commented on the results of his studies which showed an improvement in reporting levels compared to other studies conducted on Jordanian companies such as (Al-Khadash 2003) which concluded that 26% of companies covered in the study were known to report environmental information; and a study by Jahamani (2003) who found that 10 percent (of 86 Jordanian firms) presented environmental reports as part of their annual reports in a study which examined the extent, awareness and level of environmental responsibility of Jordanian companies.

Two studies conducted in the Tunisian context by Gana et al. (2011) during 2011concluded that the average disclosure rate slightly improved over the years of study. This finding was concluded from analysis of 36 Tunisian firms over the period 2000 to 2005. Belhaj et al. (2011) also examined environmental disclosure in 31 Tunisian firms and related it with financial performance and environmental performance in 2007. The findings indicate that the mean disclosure score is 9.77 and firms from industries with higher sensitivity to the environment tend to provide more environmental disclosure than firms from less environmentally sensitive industries. It is worth noting that out of 500 of Tunisia's largest firms only 53 have published environmental information in their annual reports or on their websites (Belhaj et al. 2011).

During 2012, there is evidence of some attempts by various researchers to undertake studies dealing with environmental issues. For example, Ismail et al. (2012) found that, in varying forms, 85% of Jordanian companies disclose environmental information where the sample included 60 companies in the manufacturing and service sectors. As well, Bayoud et al. (2012) found that in annual reports 60% of companies from different sectors disclose four categories of disclosure: "employee disclosure; community involvement disclosure; consumer disclosure; environmental disclosure" of corporate social responsibility (CSR); whereas, 5% of companies do not present CSR information in their annual reports. However, the trend towards environmental disclosure for companies in MENA has resulted in an increase in the number of companies that disclose environmental information.

It can be concluded that studies in developing countries are in the nascent stage. The review also demonstrates that there is a great deal of scope to embrace the interview method in further social and environmental accounting research, and this method would be particularly effective in the context of investigating this area of study. Moreover, the review also reveals that there is a total lack of research that has involved interviews stakeholder groups (Owen 2008, p. 257), such as news media and NGOs; this is surely necessary in order to gain a full understanding of management motivations in this context. In the latest study of developing countries by (Haider 2012), he also purported that EDPs are still in the nascent stage. As well, the role of multinational corporations, culture and religion remain unique factors in developing countries. Furthermore, the social, political, economic, legal and education systems in most developing countries need special emphasis in future studies. Therefore, it is of paramount importance to highlight the most important comparative studies between countries in order to derive a final score for environmental disclosure practices.

Comparison of EDPs between countries

Recently, much attention has been devoted by researchers to studying environmental disclosure through comparing countries. Most of the studies were conducted in developed countries, with only a handful being undertaken in developing countries. Kolk et al. (2002) state the KPMG International Environmental Consulting Group, together with the Institute for Environmental Management at the University of Amsterdam, carried out international surveys on environmental reporting in the years 1993, 1996, and 1999. Their recent survey observed the reporting practices in the largest 250 companies in the world (19 countries), coupled with an analysis of practices of the top 100 companies in 11 countries. Findings suggest an increase in the use of environmental reporting and dominance by the industrial sector in explaining environmental disclosure.

In another study to examine the determinants of differences in social and environmental disclosure across countries, Silberhorn et al. (2007) investigated the role of managers to determine social and environmental disclosure. The researchers compared 40 British and German companies using content analysis of company's websites, as well as interviews with managers. The most prominent motives for disclosing environmental and social information was linked to company performance, followed by corporate values, and response to stakeholder pressure. As well, these researchers found that education, human rights and animal welfare are more emphasized by British firms than German firms; and Germany firms give emphasis to the arts, cultural diversity and other cultural aspects. Moreover, they found that stakeholder groups in British companies pay more attention to disclosure than German companies.

Further, in a comparative study between the UK and the US, Holland et al. (2003) examined the regulation of environmental activities through focus on legal and regulatory frameworks of a country. This study was conducted on 37 annual reports of companies operating in four industries, namely, chemicals, mining, oil and gas, and construction and power. They concluded that companies in the UK produced a separate environmental section in their annual reports. On the other hand, US companies clearly have more legislative emphasis, where the annual reports were produced in response to legislative requirements. Moreover, Villiers et al. (2010) examined corporate environmental disclosure in Australia, the UK, and US. They studied environmental disclosure through the viewpoint of shareholders in those countries. The results of this study indicated that shareholders call for environmental information because they believe managers should be accountable to shareholders for their companies' environmental impacts. Furthermore, shareholders have indicated the uses for specific types of environmental information. Aerts et al. (2008) state that environmental disclosure relates to expenditure and risk in North America, whereas European corporations disclose more information regarding sustainable development and environmental management.

In other research, a small number of comparative studies between developed and developing countries were conducted in recent years. Ying (2006), who examined differences in environmental disclosure between Hong Kong, United Kingdom and Canada, concluded that the level of environmental disclosure in Hong Kong is low, while firms in the United Kingdom demonstrate a greater extent of disclosure. Canada and Hong Kong have similar levels of environmental disclosure. This study also shows that the size of a company and the type of industry has a strong association with extent of environmental disclosure. Another study also examined the difference in environmental disclosure. Yusoff et al. (2003) examined differences relating to EDPs between Malaysian and Australian public listed companies. This study concluded that Australian companies disclosed more extensive environmental information compared to Malaysian companies. Factors impacting on EDPs among Australian companies are related to financial performance; while the sole factor for Malaysian environmental disclosure practice is ISO 14001.

It is clear from the literature reviewed that EDPs have been progressively increasing and changing over the past decades. This, in turn, means that disclosure varies widely across countries and industries with more incidence of reporting observed in high profile companies, i.e. large companies and those that belong to environmentally sensitive industries. In addition, response of companies to disclosure of environmental information is a result of pressure from stakeholders to show the position of companies towards various environmental incidents. Therefore, supporting the study, the world has witnessed environmental incidents by large international companies as the Alaskan oil spill in Patten 1992 and the oil spill in the Gulf of Mexico in 2010. Thus, the need for research of this type is acknowledged.

The studies conducted in the context of oil companies concluded that there are many accidents that have occurred to encourage the study of the levels of environmental disclosure by oil companies. For example, the results of Patten's (1992) research confirmed that disclosure practices in 21 oil companies increased significantly after the Exxon Valdez oil spill. Thus, in the wake of environmental disasters resulting from oil companies' operations and increased awareness generally, oil companies should exert more effort in providing greater environmental disclosure to various stakeholders. In regard to the oil spill in the Gulf of Mexico in 2010 by BP. Heflin et al. (2011) established that an increase in environmental disclosure, specifically in the disclosure of disaster readiness plans, was evident in the year following the BP spill. As well, they ascertained that firms with higher institutional ownership and lower ownership concentration were more likely to increase disclosures about disaster readiness plans. Thus, there is a need for research into environmental disclosure by oil companies in the Arab region, due to the Arab countries being the largest oil producing countries in the world.

Influential national factors on EDPs

In recent years more companies disclose information about their environmental activities according to stakeholder demands relating to environmental responsibility and accountability. The extent and content of environmental disclosure differs from corporation to corporation. Generally, extensive accounting literature exists relating to the factors of environmental information that companies disclose in their annual reports and the characteristics they share with other companies that do the same. Research has shown many factors influence the reporting of environmental information regarding firms' characteristics such as company size and industry type (Al-Tuwaijri, S.A. et al. 2004; Cormier et al. 2005b; Freedman et al. 2005; Gao et al. 2005; Reverte 2009; Stanny et al. 2008).

Hence, academic researchers in many countries have paid attention to disclosure of environmental information in different types of corporations. Environmental reporting was mostly restricted to firms from high environmental impact industries in industrialized countries. Today, empirical studies show that environmental communication is becoming common in industrial sectors, including oil sectors, in different regions in the world (KPMG, 2008). However, environmental reporting still continues to be highest in countries such as USA, Japan, Germany, Australia, and the U.K. and in industries such as chemicals, pharmaceuticals, electronics, automotive, oil and gas (KPMG, 2008).

Moreover, the present literature is based on developed countries, and more specifically on countries such as Australia, Canada, Japan the UK and the USA. Review of the accounting literature shows that the characteristic properties of organisations have an impact on corporate environmental disclosure. However, these characteristic properties such as size, age of the company and type of industry will not be addressed in this study due to the study focusing solely on the oil industry. In addition, the size of corporations will be neglected in this study because the study uses IOGCs and NOGCs. The standard size is not affected by the level of disclosure of environmental variation. In relation to the sensitivity of the industry, most studies indicate that the oil industry is one industry most sensitive to the environment.

As a consequence, as far as the researcher is aware, there are currently few published studies examining internal determinants (characteristics of the company) of corporate environmental reporting by oil corporations in oil producing countries. However, this study will take into account influential external determinants of the disclosures which are likely to give a greater dimension in the difference in the level of disclosure between developed and developing countries (International Companies and National Companies). This study could make a significant contribution to the environmental reporting literature in the context of oil-exporting countries. Therefore, this study presents an attempt to address this gap in the literature by analysing whether the specific features of oil companies result in a significant difference between the factors influencing EDPs of local firms when compared to firms from other different international contexts. Therefore, this research study seeks to examine the political systems, economic systems and LSs as the influential factors in varying countries. Additionally, cultural practices can vary dramatically from country to country and have an effect on disclosure practices. Also, most countries are indifferent stages of economic development.

Economic system

Many researchers have addressed the economic system as an influence in environmental disclosure by examining the level of the economic system of the state and awareness of the economic system applied (Hibbitt 2004; Yusoff, Haslinda et al. 2005). In this context, (Xiao et al. 2005) reported that one of the significant factors affecting environmental disclosure is the economic development in a particular country. Over the last few decades, economic development has progressed differently from one country to another. Thus, countries are at different stages of economic development which leads to the existence of different concerns and priorities from one country to another (Elijido-Ten, E. 2004b). Accordingly, Xiao et al. (2005) believe that environmental issues have attracted a great deal of attention in developed countries where, to date, they are one of the priorities for governments of developed countries with developing countries lagging behind on this issue. On the other hand, it is worth noting that according to development economists accounting system in countries is dependent upon economic development and industrialization, thus financial disclosure increases as an economy becomes more developed and economic development affects a country's financial disclosure regulation (Hibbitt 2004; Xiao et al. 2005). Furthermore, Haider (2012) indicated that economic context is important in explaining accounting variation.

To determine whether economic development has an effect on accounting practices-and on environmental disclosure in organisations especially-many studies in accounting literature have examined the relationship between environmental disclosure and economic development. Furthermore, it has to be recognized that the LED has witnessed increased attention by many researchers recently (Buniamin 2012; Elmogla 2009; Haider 2012). Branco et al. (2012) reported that in order to analyse corporate social and environmental reporting, many recent studies adopted an information economics perspective. Haider (2012, p. 6) said that 'the LED of a country also has influence on the disclosure pattern'. In this respect, organisations in western countries have greater economic development, which leads to higher levels of corporate social and environmental reporting.

Cormier et al. (2005b) examined economic incentives as one of the factors affecting environmental disclosure quality in 337 firms surveyed in Germany. The findings indicated that economically derived variables can to a significant extent explain corporate environmental disclosure, irrespective of the methodological approach used. In another study,Xiao et al. (2005) examined the impact of economic development on environmental disclosure in two countries, namely the UK and Hong Kong. Surveyed firms included 33 companies from HK and 36 from the UK. This study summarised that the difference in the levels of economic development have contributed to differences in levels of disclosure between the two countries where the level of disclosure is higher in the UK than in Hong Kong. Moreover, Williams (1999) undertook a study which included seven countries in order to explain variations in the quantity of voluntary environmental and social accounting disclosure according to national variables, including economic development. This researcher concluded that the economic system in a country interacts to shape the perceptions of organizations in their need to release voluntary environmental and social accounting disclosure that meets social expectations. Therefore, these studies were conducted in different economic systems.

Ahmad, Nasir (2004) stated that most of the world's economies belong to the Bourgeois or Marxist economy. In Bourgeois economies, the private sector has a prominent role in the economic development process; contrary to the Marxist system which gives the government a greater role in the economic system of the country. Bourgeois system or the so-called newly capitalist system encourages the private sector to play an important role in the economic development process. Consequently, governments-especially in Western countries-that adopt this system exert pressure on companies to provide information about their economic activities due to the significance of that economic information (Altman 2008; Williams 1999). Haider (2012) supported this opinion and regarded information offered in Bourgeois political economy to explain accounting practices in organisations, including environmental activities, to be more valuable. In contrast, in the socialist system or so-called Marxist system, the volume of economic information is limited (Zoud et al. 2009). Therefore, to determine whether the economic system affects environmental disclosure, this research study adopted economic development as a variable to explain the differences in the quantity and quality of environmental disclosure, regardless of the economic system of the country. Archambault et al. (2003) reported that as an economy becomes more developed, firms need to raise more capital. As a result, the need for financial reporting increases.

It is interesting to point out that most countries seek to develop their economies through an economic plan to promote economic development, and economic development has been a significant factor in EDPs (Tamazian et al. 2010). Hypothetically, there should be a positive impact on the level of EDPs in a given country as the LED increases. The financial liberalization and openness of an economy are essential factors in pollution reduction.