An examination of accounting and auditing issues related to strategic environmental initiatives

Although corporate environmental accountability is receiving unprecedented attention in the United States from policy makers, the capital market, and the public at large, extant research is limited in its examination of the implications of strategic corporate environmental initiatives on accounting and auditing. The purpose of my dissertation is to address these implications by examining the association between firm environmental initiatives and audit fees, capital expenditures, and earnings quality using multivariate regression analysis. I find that firms engaged in more strategic environmental initiatives tend to have significantly higher audit fees and capital expenditures, and significantly lower levels of earnings manipulation measured using discretionary accruals. These results support the notion that auditors do recognize the importance of environmental initiatives when conducting the year-end financial statement audit, an idea that positively reflects upon the auditor’s monitoring role. The results also demonstrate the increased amount of capital resources required to participate in strategic environmental initiatives, an anecdotal notion that had yet to be empirically supported. This empirical support provides valuable insights on how environmental initiatives materially impact corporate financial statements. Finally, my results extend the extant literature by demonstrating that the superior financial performance reported by environmentally active firms is less likely driven by earnings manipulation by management, and by implication, more likely a result of real economic gains. Taken together, my dissertation establishes a strong and timely foundation for current and future research to explore corporate environmental initiatives in the United States and globally, a topic increasingly gaining momentum in today’s more eco-conscious world.^

Salinity and Chlorophyll a as Performance Measures to Rehabilitate a Mangrove-Dominated Deltaic Coastal Region: the Ciénaga Grande de Santa Marta–Pajarales Lagoon Complex, Colombia

Salinity, water temperature, and chlorophyll a (chl-a) biomass were used as performance measures in the period 1999–2001 to evaluate the effect of a hydrological rehabilitation project in the Ciénaga Grande de Santa Marta (CGSM)–Pajarales lagoon complex, Colombia where freshwater diversions were initiated in 1995 and completed in 1998. The objective of this study was to evaluate how diversions of freshwater into previously hypersaline (>80) environments changed the spatial and temporal distribution of environmental characteristics. Following the diversion, 19 surveys and transects using a flow-through system were surveyed in the CGSM–Pajarales complex to continuously measure selected water quality parameters. Geostatistical analysis indicates that hydrology and salinity regimes and water circulation patterns in the CGSM lagoon are largely controlled by freshwater discharge from the Fundacion, Aracataca, and Sevilla Rivers. Residence times in the CGSM lagoon were similar before (15.5 ± 3.8 days) and after (14.2 ± 2.0 days) the rehabilitation project and indicated that the system is flushed regularly. In contrast, chl-a biomass was highly variable in the CGSM–Pajarales lagoon complex and not related to discharge patterns. Mean annual chl-a biomass (44–250 μg L−1) following the diversion project was similar to values recorded since the 1980s and still remains among the highest reported in coastal systems around the world owing to its unique hydrology regulated by the Magdalena River and Sierra Nevada de Santa Marta watersheds and the high teleconnection to the El Niño Southern Oscillation (ENSO). Our results confirm that the reduction in salinity in the CGSM lagoon and Pajarales complex during 1999–2000 was largely driven by high precipitation (2500 mm) induced by the ENSO–La Niña rather than by the freshwater diversions.