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The disclosure of environmental conservation costs and its relation to eco-efficiency: Evidence from Japan

Keun-Hyo Yook (Accounting, Busan University of Foreign Studies, Busan, Republic of Korea)
Hakjoon Song (Accounting, Finance and Economics, California State University Dominguez Hills, Carson, California, USA)
Dennis M. Patten (Accounting, Illinois State University, Normal, Illinois, USA)
Il-Woon Kim (The University of Akron, Akron. Ohio, USA)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 6 March 2017




This paper aims to examine whether the amount of costs disclosed as relating to environmental controls is associated with environmental performance in terms of carbon-based eco-efficiency, and whether any relation supports voluntary disclosure theory or legitimacy theory arguments. Further, this paper attempts to determine whether the relations differ across the initial Kyoto Protocol period.


In this study, the focus was on Japanese firms over the period from 2002 to 2012. Disclosed environmental control costs (capital expenditures and operating costs) were identified and eco-efficiency measures based on carbon emissions were calculated. Relations were tested for using regression models controlling for other potential impact factors.


This study’s results indicate a negative relation between disclosed levels of environmental control costs and eco-efficiency performance measures, and, for two of our three eco-efficiency metrics, this is more pronounced over the Kyoto Protocol period.

Research limitations/implications

These results support a legitimacy theory (as opposed to voluntary disclosure theory) explanation for the relation between the levels of disclosed environmental control costs and carbon-based eco-efficiency.


This study is the first to explore how flexibility in cost classification may be used by companies to foster a disclosure strategy.



Yook, K.-H., Song, H., Patten, D.M. and Kim, I.-W. (2017), "The disclosure of environmental conservation costs and its relation to eco-efficiency: Evidence from Japan", Sustainability Accounting, Management and Policy Journal, Vol. 8 No. 1, pp. 20-42.



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