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The relationship between international financial reporting standards, carbon emissions, and R&D expenditures: Evidence from European manufacturing firms

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  • Apergis, Nicholas
  • Eleftheriou, Sofia
  • Payne, James E.

Abstract

This study examines the impact of research and development (R&D) expenditures on carbon dioxide (CO2) emissions prior to and under the mandatory adoption of International Financial Reporting Standards at the firm level within the manufacturing sectors of three European countries, i.e. Germany, France and the U.K. Estimation of a threshold autoregressive model using quarterly data from 1998 to 2011 reveals that in the post-IFRS mandatory adoption year R&D expenditures show a reduction in CO2 emissions to firms, i.e. rising CO2 abatement. This is likely due to the presence of incentives provided by the new accounting disclosure regime. Our results remain robust in terms of a sector analysis, firm size, and the introduction of the European Union Emission Trading Scheme (EU-ETS) across the three countries.

Suggested Citation

  • Apergis, Nicholas & Eleftheriou, Sofia & Payne, James E., 2013. "The relationship between international financial reporting standards, carbon emissions, and R&D expenditures: Evidence from European manufacturing firms," Ecological Economics, Elsevier, vol. 88(C), pages 57-66.
    • Handle: RePEc:eee:ecolec:v:88:y:2013:i:c:p:57-66
    DOI: 10.1016/j.ecolecon.2012.12.024
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    More about this item

    Keywords

    CO2 emissions; R&D expenditures; IFRS adoption; European manufacturing firms; TAR model;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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