This paper provides insight into how environmental information is reflected in the market value of listed Swedish companies. Using the residual income valuation model, we express market value of equity as a function of book value of equity, accounting earnings, and environmental performance, where the last variable is used as a proxy for other value-relevant information. Our research is motivated by the recommendation of the Swedish Society of Financial Analysts regarding environmental reporting. This recommendation assumes that environmental information has value relevance, since it is likely to affect the expected future earnings of listed companies. We contribute empirical findings to current debate on the relationship between environmental performance and shareholder value. The cost-concerned school argues that environmental investments represent only increased costs, resulting in decreased earnings and lower market values. The value creation school regards environmental efforts as a way to increase competitive advantage and improve financial returns to the investors. The current research finds support for the cost-concerned school, because the results indicate that environmental performance has a negative influence on the market value of firms.

This paper compares the legislation in Denmark, Norway and Sweden concerning what kind of environmental information firms must disclose. These three Nordic countries have great similarities regarding accounting legislation and standards. However, Denmark has chosen a different way to force firms to disclose their environmental performance compared with Norway and Sweden. Danish firms must deliver separate ‘green accounts’, while Norwegian and Swedish firms are bound to report on environmental issues in the administrative report. The Norwegian and Swedish firms' information mainly addresses the financial consequences of environmental impact and the Norwegian legislation is also found to be more extensive than the Swedish legislation. The information from the Danish firms addresses society in general. The comparison indicates some interesting topics for further analysis, e.g. how the extensive demands in Norway for information about products' impacts when discharged may be fulfilled. As a background for this comparison, an outline of the discussions about voluntary versus regulated environmental information is given as well as an overview of some international standards and recommendations concerning firms' environmental disclosures. Copyright © 2003 John Wiley & Sons, Ltd. and ERP Environment.

This paper presents an investigation of how the new demands for auditing environmental information in the administrative reports are perceived by Swedish accountants. Responses from 123 surveyed authorized public accountants show that they have a positive attitude towards environmental information. The accountants demand additional training and they believe that the amount of environmental information companies present is going to increase in the future, or at least not decrease. The survey results are analyzed from the basis of two perspectives: large auditing firms have better resources to educate, guide and train their employees than small auditing firms; and accountants with experiences in auditing environmental information have more training and a different attitude towards environmental information compared to accountants with no experiences. Whether or not accountants have received any special training differs significantly between accountants with experience from auditing environmental information, and those with none.

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