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• Article | Accounting Horizons | June 2013

  A Framework for Research on Corporate Accountability Reporting

  Karthik Ramanna

  This paper provides an accounting-based conceptual framing of the phenomenon of corporate accountability reporting. Such reporting is seen as arising from a delegator's (e.g., a citizenry) demand to hold a delegate (e.g., shareholders) to account. When effective, corporate accountability reporting can internalize certain externalities into firms' resource-allocation decisions, although doing so will not always serve shareholders' interests. I leverage the positive accounting literature's current understanding of properties of financial reports to develop three hypotheses on corporate accountability reporting. I argue that an accountability reporting system is likely to be more useful to a delegator if it (1) mitigates information advantages across delegates and delegators, (2) reports both stocks and flows in the measures of account, and (3) has a mutually agreeable due process to match across periods the actions of delegates and the outcomes of those actions. I show how the successive incidence of these properties in observed corporate accountability reports can be used to determine whether and how those reports create or destroy value for shareholders and other constituencies.

  Citation:

  Ramanna, Karthik. "A Framework for Research on Corporate Accountability Reporting." Accounting Horizons 26, no. 2 (June 2013).

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• Article | Harvard Business Review Blogs | May 15, 2013

  Sustainability in Financial Services Is Not About Being Green

  Robert G. Eccles and George Serafeim

  Keywords: sustainability; financial services; financial services industry; banks; insurance companies; risk management; risk; accounting;

  Citation:

  Eccles, Robert G., and George Serafeim. "Sustainability in Financial Services Is Not About Being Green." Harvard Business Review Blogs (May 15, 2013).

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• Case | HBS Case Collection | 2013 (Revised from original 2012 version)

  Dow Chemical: Innovating for Sustainability

  Robert G. Eccles, George Serafeim and Shelley Xin Li

  Dow Chemical is one of the few major American industrial corporations that was founded in the late 19th century that is still in existence. From its origins producing bromine out of the brine underneath Midland, Michigan, the company has evolved from a diversified commodity chemical company to an advanced materials company whose products and services can make its clients more sustainable. During the 1960s and 1970s the company received a series of external shocks in the form of negative public opinion for some of its activities. These challenged the company's perception as being a "good company" and made it realize it needed to more proactively seek outside perspectives on how the company was viewed and what it should do. This led to the formation of the Corporate Environmental Advisory Council in 1992 which was renamed the Sustainability External Advisory Council (SEAC) in 2008. With substantial input from the SEAC, the company set two ambitious sets of ten-year goals: 1996-2005 and 2006-2015 and was largely successful in meeting them or on the way to doing so. In 2011, Neil Hawkins, Vice President of Sustainability and EH&S (Environmental, Health and Safety) is trying to decide what the content and format of the next ten-year goals should be to ensure the company's viability on its 200th birthday. Should they be incremental goals like the ones for 2005 or ambitious stretch targets like the ones for 2015? Or should they be broad statements of principles that encourage innovating for sustainability throughout the company? A further challenge facing the company is that it was rapidly globalizing with a large portion of its workforce outside its Midland, Michigan headquarters, making it even more difficult to preserve a common culture and commitment to sustainability.

  Keywords: Innovation Strategy; Environmental Sustainability; Chemical Industry;

  Citation:

  Eccles, Robert G., George Serafeim, and Shelley Xin Li. "Dow Chemical: Innovating for Sustainability." Harvard Business School Case 112-064, May 2013. (Revised from original January 2012 version.)

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