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Accounting for the environmental impacts of Texaco's operations in Ecuador: Chevron's contingent environmental liability disclosures

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  • Stacie Buccina
  • Douglas Chene
  • Jeffrey Gramlich

Abstract

This paper examines the disclosure of a contingent legal obligation that arose as a result of Texaco Inc.’s oil drilling and extraction activities in Ecuador. We examine Texaco's and, after Texaco's acquisition by Chevron in 2001, Chevron's, financial reporting and SEC disclosures pertaining to a lawsuit claiming damages related to the environmental effects of Texaco's 30 years of operations in Ecuador. After an historical review of Texaco's drilling and extraction activities in Ecuador, and the ensuing litigation that began in 1993, we consider U.S. accounting and reporting rules as they apply to Texaco and Chevron. Given these rules, we analyze the appropriateness and timing of Chevron's disclosures related to the heretofore-unresolved litigation. The discussion employs legitimacy and stakeholder theories to explain Chevron's disclosures.

Suggested Citation

  • Stacie Buccina & Douglas Chene & Jeffrey Gramlich, 2013. "Accounting for the environmental impacts of Texaco's operations in Ecuador: Chevron's contingent environmental liability disclosures," Accounting Forum, Taylor & Francis Journals, vol. 37(2), pages 110-123, June.
    • Handle: RePEc:taf:accfor:v:37:y:2013:i:2:p:110-123
    DOI: 10.1016/j.accfor.2013.04.003
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    Cited by:

    1. Karambu Kiende Gatimbu & Maurice Juma Ogada & Nancy Budambula & Samuel Kariuki, 2018. "Environmental sustainability and financial performance of the small‐scale tea processors in Kenya," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1765-1771, December.
    2. Icaza, Daniel & Borge-Diez, David & Galindo, Santiago Pulla, 2022. "Analysis and proposal of energy planning and renewable energy plans in South America: Case study of Ecuador," Renewable Energy, Elsevier, vol. 182(C), pages 314-342.
    3. Nelson OKUTU & Folajimi F. ADEGBIE, 2023. "Sustainability Reporting and Financial Performance of Oil and Gas Companies Listed in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(12), pages 1023-1041, December.
    4. Alberto Diantini & Salvatore Eugenio Pappalardo & Tim Edwards Powers & Daniele Codato & Giuseppe Della Fera & Marco Heredia-R & Francesco Facchinelli & Edoardo Crescini & Massimo De Marchi, 2020. "Is this a Real Choice? Critical Exploration of the Social License to Operate in the Oil Extraction Context of the Ecuadorian Amazon," Sustainability, MDPI, vol. 12(20), pages 1-24, October.
    5. Sidney J. Gray & Niclas Hellman & Mariya N. Ivanova, 2019. "Extractive Industries Reporting: A Review of Accounting Challenges and the Research Literature," Abacus, Accounting Foundation, University of Sydney, vol. 55(1), pages 42-91, March.
    6. Juan Durango-Cordero & Mehdi Saqalli & Christophe Laplanche & Marine Locquet & Arnaud Elger, 2018. "Spatial Analysis of Accidental Oil Spills Using Heterogeneous Data: A Case Study from the North-Eastern Ecuadorian Amazon," Sustainability, MDPI, vol. 10(12), pages 1-13, December.
    7. Adams, Dawda & Ullah, Subhan & Akhtar, Pervaiz & Adams, Kweku & Saidi, Samir, 2019. "The role of country-level institutional factors in escaping the natural resource curse: Insights from Ghana," Resources Policy, Elsevier, vol. 61(C), pages 433-440.
    8. Belal, Ataur Rahman & Cooper, Stuart M. & Roberts, Robin W., 2013. "Vulnerable and exploitable: The need for organisational accountability and transparency in emerging and less developed economies," Accounting forum, Elsevier, vol. 37(2), pages 81-91.

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