Please use this identifier to cite or link to this item:
Chen, Hui
Letmathe, Peter
Soderstrom, Naomi
Year of Publication: 
[Journal:] Contemporary Accounting Research [ISSN:] 1911-3846 [Volume:] [Issue:] [Pages:] n/a-n/a
The Clean Development Mechanism (CDM) is a flexible carbon market mechanism managed by the United Nations. The program grants tradable carbon emissions credits (Certified Emission Reductions) for carbon‐reducing projects in developing countries. A project can only be admitted to the program if it is not financially profitable, and thus would not take place without the emission credits granted through the CDM. In this paper, we examine how monitoring reduces incentives of companies to bias the reported expected financial viability of potential CDM projects to gain admission to the program. We find that reported rates of return, which are a key factor for admission to the program, tend to be downwardly biased and are negatively associated with the expected benefits stemming from forecasted greenhouse gas reductions. However, monitoring from various sources mitigates some of the distorted incentives and related reporting bias. Furthermore, the monitoring effect becomes much stronger after 2008, when the CDM Executive Board implemented a series of measures to strengthen the additionality testing that provides guidance for program applications.
reporting bias
clean development mechanism (CDM)
greenhouse gas reductions
carbon emissions
environmental accounting standards
biais déclaratif
mécanisme pour un développement propre (MDP)
réduction des gaz á effet de serre
émissions de carbone
normes de comptabilité environnementale
Persistent Identifier of the first edition: 
Document Type: 
Document Version: 
Published Version

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.