Organisation Isomorphism as Determinants of Environmental Management Accounting Practices in Malaysian Public Listed Companies

Abstract

Rising environmental issues due to company activities and public demand for a better environment have caused companies to face pressures from their stakeholders. However, in Malaysia, the implementation level of environmental practices is still moderate among public listed companies. This study, therefore, examines organisational isomorphism as the determinant of the extent of environmental management accounting practices by Malaysian public listed companies in the Main Market, based on institutional theory. Coercive, normative and mimetic isomorphisms were taken as the determinants of the extent of usage of environmental management accounting. A survey method was used, consisting of sending an online questionnaire for data collection to Malaysian public listed companies. Statistical analyses were used to analyse the variables. The survey results revealed that these companies have, to a great extent, implemented environmental management accounting. It was also found that coercive isomorphism significantly influenced the environmental management accounting practices of Malaysian public listed companies. This suggests that companies will implement environmentally-related practices with the existence of coercive pressures, derived from government and shareholders. The implementation of environmental management accounting is beneficial in overcoming the problem of traditional management accounting, which fails to incorporate hidden environmental costs. Thus, the empirical findings from the study put forth crucial, specific factors that could aid the government in encouraging companies to become responsible, and to contribute to green initiatives through environmental management accounting practices.