Submitted Hui Sophia Ji Phd Thesis S2101888
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Corporate Annual Report Disclosures of Obligations Pertaining to Contaminated Sites: An Australian Study A thesis submitted in fulfillment of the requirements for the degree of Doctor of Philosophy Hui (Sophia) Ji B.Bus, Dip.Bus School of Accounting College of Business RMIT University 4 July 2013 Declaration I certify that except where due acknowledgement has been made, the work is that of the author alone; the work has not been submitted previously, in whole or in part, to qualify for any other academic award; the content of the thesis is the result of work which has been carried out since the official commencement date of the approved research program; any editorial work, paid or unpaid, carried out by a third party is acknowledged; and, ethics procedures and guidelines have been followed. Hui (Sophia) Ji 4 July 2013 II Acknowledgements I would like to take this opportunity to firstly thank my supervisor and dear friend, Professor Craig Deegan, for his world-class quality guidance, sharp thinking, encouragement and inspiration throughout my research journey. I have learnt from his wisdom and built my skills and confidence in research through his honest feedback. Associate Professor Robert Inglis, my other ‘lunch buddy’, without him resourcing networks with elite professional accountants and auditors in the field, high quality data collection in the last phase of my PhD study would have been a ‘mission impossible’. He acts as a knight and magician, making the impossible a reality. I have enjoyed support from my friends and colleagues Peter Keet, Kaye Hilliar, Sonia Magdziarz, Joan Pagonis and Pavithra Siriwardhane. They, together with my Chinese friends Triston Zhou, Emily Fan, Dianwei Yao, Lucy Wu, Dong Guo and Vicky Lu have accompanied me through both the fun times and difficult moments of my life. I also wish to acknowledge and thank the School of Accounting and the Business College for providing me teaching relief, which supported me substantially throughout this thesis, for which I am grateful. My special thanks to my family members in China: Jiachen Zhan, Rui Ji, Xiang Ji, Yi Huang, and my newly born niece Li Ji, and especially my parents. My father’s encouragement has made me open my world to Australia and my mother’s caring and sacrifices to my family have made her my real life hero. Lastly, numerous thanks to my husband James Sewell for all the endless love and support he has given me, and his ‘always there for me’ stance. His understanding, patience, and encouragement toward what I am doing, and generous, broad-minded, relaxed, humorous but positive attitude make my life journey delightful and interesting to explore. III Table of Contents RESEARCH SUMMARY ........................................................................ 1 CHAPTER 1. INTRODUCTION .............................................................. 3 1.1 Problem statement ................................................................................................ 4 1.2 Motivation of the research and research objectives .............................................. 5 1.3 Research design: four phases of the research ...................................................... 6 1.3.1 Phase One: finding contaminated site information within Australia ............................ 6 1.3.2 Phase Two: exploring how Australian companies disclose their remediation liabilities within annual reports .......................................................................................................... 8 1.3.3 Phase Three: selecting an appropriate theory to explain corporate reporting in relation to contaminated sites ............................................................................................. 8 1.3.4 Phase Four: exploring institutional explanations to the lack of site remediation obligation disclosures by Australian companies .................................................................. 9 1.4 Contribution to knowledge ................................................................................... 10 1.5 Structure of the thesis.......................................................................................... 11 CHAPTER 2. PHASE ONE: FINDING CONTAMINATED SITE INFORMATION WITHIN AUSTRALIA ................................................. 13 2.1 Key terms used in this phase .............................................................................. 14 2.2 Research questions relating to Phase One ......................................................... 15 2.3 Potential sources of information pertaining to contaminated sites ....................... 16 2.4 The research process and results ....................................................................... 17 2.4.1 Policy, legislative and administrative regimes relating to contaminated sites in Australia ........................................................................................................................... 17 IV 2.4.1.1 Site contamination assessment ......................................................................... 18 2.4.1.2 Remediation and management of site contamination ........................................ 19 2.4.1.3 Contaminated site registers............................................................................... 19 2.4.2 Environmental authorities’ annual reports ................................................................ 20 2.4.3 Website search in each jurisdiction .......................................................................... 22 2.4.3.1 Australian Capital Territory ................................................................................ 23 2.4.3.2 New South Wales ............................................................................................. 23 2.4.3.3 Northern Territory .............................................................................................. 25 2.4.3.4 Queensland ...................................................................................................... 25 2.4.3.5 South Australia.................................................................................................. 26 2.4.3.6 Tasmania .......................................................................................................... 26 2.4.3.7 Victoria .............................................................................................................. 27 2.4.3.8 Western Australia .............................................................................................. 28 2.4.4 Media and NGO search ........................................................................................... 29 2.5 Concluding discussions and recommendations ................................................... 29 2.6 Summary ............................................................................................................. 33 CHAPTER 3. PHASE TWO: EXPLORING HOW AUSTRALIAN COMPANIES DISCLOSE THEIR REMEDIATION LIABILITIES WITHIN ANNUAL REPORTS ............................................................................ 34 3.1 Literature review and research question.............................................................. 35 3.2 Australian disclosure requirements ..................................................................... 38 3.3 Research design and method .............................................................................. 44 3.3.1 Identifying corporations known to have contaminated sites ..................................... 44 3.3.2. Reviewing annual reports ....................................................................................... 45 V 3.4 Research results ................................................................................................. 46 3.4.1 Wesfarmers—the company ..................................................................................... 47 3.4.1.1 Details of contaminated sites—Wesfarmers ...................................................... 47 3.4.1.2 Anticipated disclosures by Wesfarmers ............................................................. 48 3.4.1.3 Actual disclosures by Wesfarmers .................................................................... 51 3.4.2 BHP Billiton—the company ...................................................................................... 53 3.4.2.1 Details of contaminated sites—BHP .................................................................. 53 3.4.2.2 Anticipated disclosures by BHP ........................................................................ 53 3.4.2.3 Actual disclosures by BHP ................................................................................ 54 3.4.2.4 Further BHP-related site contamination—the case of the Ok Tedi copper mine 57 3.4.2.5 Anticipated disclosures in relation to Ok Tedi .................................................... 58 3.4.2.6 Actual disclosures relation to Ok Tedi ............................................................... 59 3.4.3 Orica—the company ................................................................................................ 60 3.4.3.1 Details of contaminated sites—Orica ................................................................ 61 3.4.3.2 Anticipated disclosures by Orica ....................................................................... 64 3.4.3.3 Actual disclosures by Orica ............................................................................... 65 3.4.4 Incitec Pivot Limited (IPL)—the company ................................................................ 70 3.4.4.1 Details