The Impact of Profitability,Certainty,and Degree of Fine on the Persuasiveness of Environmental Assessment Reports

Abstract

Many companies have followed the suggestion of the Environmental Protection Agency to conduct voluntary self-audits of their environmental practices. When company environmental assessment auditors present the results of these compliance audits to management, their proposals for environmental remediation compete with many legitimate alternative proposals for limited company resources. The research reported on here evaluated the impact of three factors on the persuasiveness of environmental remediation memos. Specifically, the present investigation hypothesized that meeting profitability goals, the relative certainty of the costs of solving the environmental violation, and higher fines if the violation is discovered by government regulators would add to the persuasiveness of an environmental memo. Lack of meeting profitability goals, significant uncertainty about the costs of solving the environmental violation, and lower fines would reduce an environmental remediation proposal's persuasiveness. Data analysis confirmed the hypotheses.