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Essay / Research Paper Abstract
This 5 page paper discusses the statement that positive accounting theory can explain the greening of financial accounting disclosure but that it cannot provide a framework for improving it. The paper considers the link between positive accounting theory (PAT) and how it does or does not explain the increasing disclosure of environmental reporting and whether it provides a framework for such disclosure. The bibliography cites 10 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEenvpat.rtf
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Unformatted sample text from the term paper:
no legislation requiring environmental accounting to take place, and the commercial culture is one that is changing as a result of stakeholder demands ands increasing public awareness. Other countries, such
as Italy, where there has been a stringer stakeholder attitude, have developed a different approach where annual accounts will include an environmental account and an environmental balance sheet (Bennett and
James, 2000). However, there has also been an increasing awareness that environmental accounting can add value, both directly and indirectly to a business, as seen with the Calder Valley study
(Johnston, 1994). Here, of projects identified as being environmentally friendly, 72% had a payback period of twelve months or less, some had no initial costs (Johnston, 1994). It has
been hypothesised that positive accounting theory may explain why this greening is occurring and how it is occurring, but that it cannot provide a framework for the development of green
or environmental accounting. For most individuals the first and main source of information will be the annual accounts, as such it is here that the first port of call
for environmental accounting information will take place (Stiles and Taylor, 2003). With positive accounting theory "the role of financial reporting theory is to supply a monitoring device to reduce the
information between the principals (i.e. the investors) and the agents (i.e. the management)" (Courtis, 1993; 18). However, environmental accounting and positive accounting theory fail to give the agents who put
together the accounts a motivation to include the environmental measures (Milne, 2001). In general terms the main message of this is not looking at what accounting should be and
how it should take place, but at what it actually is and the study of the current practices (Sterling, 1990). As a result positive accounting theory can be seen as
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