Carbon Accounting: Challenges for Research in Management Control and Performance Measurement

Carbon reduction programs and corporate emissions reporting have expanded rapidly across firms in response to climate change and global warming. This development is partly driven by institutional demands and partly by value creation considerations. The consequences of these developments for management accounting and control (MAC) are not clear, despite anecdotal evidence that suggests an increasing effort to incorporate carbon accounting into traditional decision and reporting processes. The reasons for this lack of clarity are the disproportionate focus in practice on carbon disclosure, compared to a small number of empirical studies, and the absence of an academic debate in this novel area from a MAC perspective. This paper seeks to stimulate such an academic debate by reviewing the extant literature, identifying key theoretical and empirical shortcomings of extant academic research, and outlining some directions for future studies on carbon accounting. These directions are inspired by more established MAC research that may help to guide and organize MAC research in the emerging and exciting field of carbon accounting.     

Preferences,entry, and market structure

We provide a unified approach to imperfect (monopolistic, Bertrand, and Cournot) competition when preferences are symmetric over a finite but endogenous number of goods. Markups depend on the Morishima elasticity of substitution and on the number of varieties. The comparative statics of free‐entry equilibria is examined, establishing the conditions for markup neutrality with respect to income, market size, and productivity. We compare endogenous and optimal market structures for several non‐CES examples. With a generalized linear direct utility, the markup can be constant and optimal under monopolistic competition, and nonmonotonic in the number of firms under Bertrand or Cournot competition.     

Accounting and the Hope of Action

The paper discusses the role of hope in the construction of an accounting technology to realize a program, by looking at a process of choosing non-financial indicators in an effort to achieve healthier workplaces. By exploring the literature dealing with the concept of hope and by drawing on the debate on the relationship between accounting and action, we highlight the features of three hope-related concepts (hopelessness, naïve hope, and reflective hope). We also highlight how these concepts relate to different areas of uncertainty (validity, accuracy, and relevance) in the development of accounting technologies. Evidence collected through particiapant observation of a team involved in the construction of indicators offers empirical material to investigate the interplay between hopelessness, naïve hope, and reflective hope in relation to uncertainties concerning the link between accounting and action. Beyond analyzing how team members move from a naïve to a reflective hope in making the accounting–action link, the paper shows that among practitioners it is accepted that unintended consequences constitute the rule rather than the exception in the accounting–action link.     

Does slack always affect resilience? A study of quasi-medium-sized Italian firms

Research on organizational slack, which has focused mainly on its effect in large, publicly traded firms and on transitional economies, has found that slack functions as a buffer in periods of crisis. However, little work has been done on the value of slack resources for smaller firms in mature industries. This study contributes to the resource-based literature with a quantitative analysis of a broad sample of Italian SMEs that operate in the traditional ‘Made in Italy’ industries. The purpose of the paper is to use longitudinal data from before and after the 2008 world financial crisis to determine whether slack resources drive growth and profitability in organizations with limited resources that operate in mature industries in periods of recession. The results of two-stage least squares regression indicate that, similar to their larger counterparts, small firms must secure high levels of profitability in order to achieve sound growth during recessions. Potential financial slack is equally important in driving profitability in these periods, although it is not related to higher growth. Investing in R&D does not affect small firms’ ability to be profitable and grow during recessions.     

Economic feasibility analysis for electrical generation from biogas in waste disposal sites in Mexico City

This article highlights the main aspects related to energy generation from biogas in a controlled landfill of Mexico City in order to determine profits and environmental benefits. The designed structures and public policies to provide waste management services in Mexico City have been exceeded. A significant increase in demand has led the government of Mexico City to base public services on rudimentary techniques using obsolete equipment. The modernization of waste disposal facilities and the diversification of services linked to waste treatment can offer several business opportunities to optimize energy generation from solid wastes. The use of landfills to dispose large amounts of waste enables the energy generation from biogas. The energy generated can diversify the electricity market and provide economic benefits to landfills managers to cover operational costs.     

INCENTIVE EFFICIENT PRICE SYSTEMS IN LARGE INSURANCE ECONOMIES WITH ADVERSE SELECTION

We decentralize incentive efficient allocations in large adverse selection economies by introducing a competitive market for mechanisms, that is, for menus of contracts. Facing a budget constraint, informed individuals purchase (lottery) tickets to enter mechanisms, whereas firms sell tickets and supply slots at mechanisms at given prices. Beyond optimization, market clearing, and rational expectations, an equilibrium requires that firms cannot favorably change, or cut, prices. An equilibrium exists and is incentive efficient. An equilibrium can be computed as the solution to a programming problem that selects the incentive efficient outcome preferred by the highest type within an appropriately defined set. For two‐types economies, this is the only equilibrium outcome.     

Bank competition and regional differences

We estimate banks' conduct for Italian regions, then regress the behavioural parameters on selected indicators of local banking market structure and macroeconomic performance. This allows to identify some factors explaining why banks exhibit different patterns of conduct across regions.     

Export variety and the economic performance of countries

We explore the relationship between export variety and economic development, using data on OECD countries between 1964 and 2003. We show that structural change in the world economy has a particular arrow of time leading to a growing variety of exports. Distinguishing between related variety (within sectors) and unrelated variety (variety between sectors), we also show that related variety stimulates growth instantaneously, while unrelated variety only promotes growth with a considerable time lag. This finding is in line with the evolutionary notions that economic development and international trade patterns are path dependent.

Building a Sustainable Bank: The Case of GTBank of Nigeria

GTBank of Nigeria has, in just 20 years, developed into one of the most profitable and sustainable financial institutions in Africa. The case identifies the choices that helped the bank emerge successful from several shocks to the Nigerian financial sector and has implications for other financial institutions trying to balance sustainability and profitability. On the basis of eight years of research on the bank, we illustrate six factors that have characterized its success: (1) effective leadership, (2) a focus on people rather than strategy, (3) adopting a simple and focused strategy, (4) a culture of sustainable banking, (5) confronting effectively the external environment, and (6) exploitation of technology to accelerate the business. GTBank’s story raises questions about what makes a company sustainable and analyzes the decisions that executives need to make, often in challenging external circumstances, in order to preserve the long‐term sustainability of an organization. © 2014 Wiley Periodicals, Inc.     

Theory and Practice of Contagion in Monetary Unions: Domino Effects in EMU Mediterranean Countries

This paper analyzes strategic interactions and contagion effects in the peripheral countries of a monetary union. Using game theory and cost-benefit analysis, the paper determines the set of equilibrium solutions under which country-specific shocks are transmitted to other member countries giving rise to contagion. Numerical simulations, obtained by a simple calibration of the model on some key Mediterranean countries of the Euro Zone, show the probabilities of contagion from Greece, Spain and Italy.