How does environmental accounting information influence attention and investment?

Abstract

PurposeEnvironmental consequences increasingly influence management strategy and choice. The purpose of this paper is to investigate the effects on attention and investment of: incorporating environmental data into a balanced scorecard (BSC), called the sustainability balanced score card (SBSC) and the organization of environmental accounting information.Design/methodology/approachIn a between‐participant design, participants (n≈ 95) chose from among two investments using BSCs. Participants were randomly assigned to one of three conditions: no environmental data (control or BSC condition); environmental data embedded within the traditional BSC (four‐perspective SBSC); or environmental data added to a BSC as a standalone fifth perspective (five‐perspective SBSC).FindingsInvestment to achieve environmental stewardship objectives was greater with the four‐perspective SBSC than the traditional BSC. In addition, participants were most efficient, i.e. spent the least total time, and least time per data element examined, with the four‐perspective SBSC. Finally, the time spent examining, and decision weight given to, environmental data were unrelated.Research limitations/implicationsProfessional managers and accountants may have greater knowledge of environmental metrics than do students, who are the participants in this study; hence, the results may not generalize to higher knowledgeable professionals since their processing of environmental data may differ from the lower knowledge participants of this study.Practical implicationsThe form (i.e. organization) of environmental accounting data changed the allocation of participants' attention while the presence of environmental accounting data changed participants' investments; hence, both the presence and form of environmental accounting information influenced decision making.Originality/valueThis study is among the first to show differing influences from both the presence and organization of environmental accounting data on attention and investment.