When accounting choices are not driven by opportunistic behaviours: the case of environmental accrued liabilities

This paper aims to determine the key drivers of environmental accounting choices that influence financial performance of companies. Are these choices mainly driven by opportunistic behaviours and economic considerations like other accounting choices affecting financial performance? Or, on the contrary, are they context-specific and mainly shaped by institutional pressures? To answer these questions, I focus on the decision process related to environmental liabilities recognition and to how/by who these decisions are taken. In the mainstream analysis of accounting choices, the amounts of environmental provisions are used to manage earnings, like most accruals. But in that perspective, no distinction is done between an environmental provision that requires, to be estimated, high technical skills and another provision that requires only an expert judgment. It is assumed that this specific context influences accountants' decisions and that accounting choices are not only the results of opportunistic behaviours. To assess this idea, a multiple case study has been conducted through the analysis of companies' documentation and semi-structured interviews with different actors of the decision process in companies recognising significant environmental liabilities. This decision process, which leads to environmental provisions recognition, could be analysed as a bottom-to-top, highly technical and standardized process that gives finally little flexibility to actors of the top management to manage earnings. These results emphasize that accounting is not only an "accountant activity" but is first, and foremost, the reflection of events, operations, economic or technical facts concluded, traded or valued by non-accounting professionals, reducing the leeway in terms of accounting measurement.