Abstract

A unique definition of sustainability, or sustainability reporting, does not exist, but it continues to progress and has emerged as one of the most critical issues in the business area. It is correlated with several contemporary social and disclosure practices, including corporate social responsibility (CSR), environmental disclosure, corporate citizenship, green economy, and sustainable entrepreneurship. All these concepts are studied in an accounting context; in other words, accounting and its branches are adapted to the new phenomena of sustainability. This study focuses on the effect of sustainability reporting in earnings quality, using income smoothing as a proxy of earnings quality. I apply this study to Saudi Arabia because it is a petroleum country where notions of sustainability must be studied. Empirical results show an important level of reporting of sustainability that positively affects the practice of income smoothing.

Highlights

  • Today, the close link between the economy and the environment is recognized

  • In 2002, the United Nations Conference in Johannesburg stressed the importance of adopting adequate environmental controls and information systems at different levels in countries that can be used as a basis for political decisions, mainly through the Global Reporting Initiative (GRI) and the Global Compact

  • The index includes many items related to corporate social responsibility (CSR), economic, and environmental governance, updated to the new guidelines of the International Organization of Standardization (ISO) 26000

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Summary

Introduction

The close link between the economy and the environment is recognized. the economy must draw its raw materials from the environment to develop goods and services, but it dumps garbage back in. The Earth Summit in Rio de Janeiro in 1992 marked a turning point in adopting Agenda 21 for Sustainable Development, which introduced the concept of environmental accounting as an instrument for implementing coherent policies in. In 2002, the United Nations Conference in Johannesburg stressed the importance of adopting adequate environmental controls and information systems at different levels in countries that can be used as a basis for political decisions, mainly through the Global Reporting Initiative (GRI) and the Global Compact. Environmental accounting provides more information and promotes transparency and accountability for political action for the environment by bringing the economy and the environment closer together. On another hand, green or universal accounting is slowly entering the world of finance. An important change in the economic model was evident, and the subject is taken very seriously by a handful of auditors, experts, and researchers

Accounting and sustainable development
Relation between sustainability reporting and income smoothing: hypothesis development
Population and sample
Independent and explanatory variables
Control variables
Descriptive statistics
Hypothesis test
Discussion and conclusion
Limits and perspectives of research
Full Text
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