CONSTRUCTING A COMPOSITE GREEN ACCOUNTING INDEX AND ASSESSING ITS NONLINEAR IMPACT ON INSTITUTIONAL QUALITY: A BAYESIAN QUANTILE REGRESSION APPROACH
DOI:
https://doi.org/10.18623/rvd.v22.n5.3809Keywords:
Green Accounting, Institutional Quality, Bayesian Quantile RegressionAbstract
Despite growing concerns about environmental issues, we believe the benefits of environmental accounting outweigh the challenges. However, to date, no study has examined the impact of Green Accounting Index (GAI) on Institutional Quality (IQ). This study addresses this gap by investigating the effect of GAI on IQ across 84 countries worldwide during the period 2002–2020. Using a Bayesian Quantile Regression (BQR) model, the results reveal that GAI consistently exerts a positive influence on IQ across all quantiles—0.1, 0.25, 0.5, 0.75, and 0.9. These findings highlight the crucial role of GAI in enhancing institutional quality across different institutional segments. Notably, at the 0.9 quantile, the relationship tends to weaken, which strongly supports the information disclosure theory proposed by Diamond and Verrecchia (1991), suggesting that when a country reaches a stable and robust institutional threshold, the marginal impact of GAI on IQ diminishes. The findings underscore the importance of prioritizing GAI implementation to reduce corruption space and improve institutional quality. GAI provides a more consistent and comprehensive approach to enhancing IQ in diverse environmental contexts.
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