Environmental accounting: The relationship between pollution performance and economic performance in oil and gas refineries

Literature from economics and regulatory theory provide insights into expected relationships between economic performance, pollution performance, and disclosures of pollution performance. A research study is undertaken to determine if economic incentives exist for noncompliance with regulatory standards, and if accounting related disclosure of regulatory enforcement actions is a determinant of environmental performance.; Data was gathered from Environmental Protection Agency (EPA) database files on enforcement actions, and from Form 10-Ks on economic performance and pollution performance disclosure. A regression model tests whether economic variables and disclosure variables are determinants of enforcement actions taken against oil refineries under three major environmental statutes.; Results indicate that economic incentives may exist for noncompliance with environmental regulations, and that disclosure of EPA enforcement activity has a moderating effect on pollution performance. These results suggest a public policy role for accounting disclosure of regulatory enforcement.