Water accounting disclosure: a review of empirical literature

Abstract

This paper tries to provide a timely review of the empirical literature dealing with water accounting disclosure as this topic has gained momentum following water shortage worldwide.

Reviewed papers are collected using electronic searches in numerous electronic databases (e.g., Science Direct, Emerald, Wiley-Blackwell, Springer, and Taylor & Francis). Articles dealing with water-related disclosure are generally published in sustainability and accounting journals. Keywords used to identify relevant studies include “water reporting” and “water disclosure”. Our search strategy yields 37 studies published between 2011 and the middle of 2023.

The summary of reviewed papers suggests that the majority of studies were conducted in China, and identifies three streams of research.

The first stream of research that focuses on the determinants of water reporting reveals that industry water sensitivity is the most significant predictor. The second highlights the beneficial economic consequences of water reporting has a beneficial effect on investors through reduced cost of capital, on managers through reduced risk-taking and improved financial reporting quality, and on consumers through increased acceptance of recycled water. The last stream of research shows a shortage of water disclosure practices that vary considerably across sectors and countries.