On The Effectiveness of Social and Environmental Accounting

Marc Orlitzky, Glen Whelan


This paper presents the broad outline of an instrumental theory of social and environmental accounting (SEA) at two levels of analysis: organizational and societal.  We argue that, given the impact of signaling and transaction costs as well as various other costs and benefits of SEA, the level of SEA should be set so that marginal costs of SEA equal marginal benefits (at the firm level) or marginal costs of SEA to society equal marginal benefits to society (in line with the tenets of social efficiency).  In this context, we summarize the overall empirical evidence regarding the financial benefits of social and environmental disclosures for the reporting organization. Moreover, because all organizational decision making is embedded in political governance systems, we also highlight the importance of these systems for SEA and conclude with three suggestions for future research.


Corporate social performance; corporate social responsibility; environmental accounting; moral frameworks; political governance systems; social accounting; social efficiency; utilitarianism.

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DOI: http://dx.doi.org/10.22164/isea.v1i2.20


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