Title: The effect of environmental accounting on financial risk management of firms via insurance

Authors: I.E. Nikolaou, A.N. Yannacopoulos

Addresses: Department of Environmental Studies, University of the Aegean, Lofos Panepistimiou, 81100, Mytilene, Greece. ' Department of Statistics, Athens University of Economics and Business, Patission 76, 10434, Athens, Greece

Abstract: Nowadays, firms disclose environmental information through environmental reports. These disclosures are necessary for insurance companies to face financial losses related to environmental incidents, in an attempt to achieve fair pricing for corporate insurance contracts, to evade any future financial risks and, eventually, to achieve efficient risk management. It is the aim of this paper to investigate, with the use of a probabilistic model, how these disclosures assist insurance companies to determine fairly insurance premia and as a consequence allow for the more efficient risk management of the firm.

Keywords: environmental accounting; environmental disclosures; insurance companies; environmental management; financial risk management; environmental reporting; probabilistic modelling; insurance premiums.

DOI: 10.1504/IJMEF.2009.023062

International Journal of Monetary Economics and Finance, 2009 Vol.2 No.1, pp.1 - 15

Published online: 08 Feb 2009 *

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