A study of determinant factors of environmental liabilities disclosure in financial reporting

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We explore corporate financial reporting incentives for environmental liabilities. We analytically examine the determinants of environmental liabilities disclosure. We establish that corporate environmental liabilities disclosure is evolved in an environment that environmental agencies impose litigation risk on firms with environmental obligations. Further, we find recognition criteria of environmental liabilities is affected by corporate commitment strategy in debt contracts. We also show that accounting regulation about environmental liabilities affects managerial incentives related to environmental management and increases corporate environmental contamination.