Do Traditional Accounting Systems “Hide” Costs?

Do traditional, volume based accounting systems hide important costs such as cost of compliance with regulations? Using an example of environmental costs in the steel industry, Professors Satish Joshi and Ranjani Krishnan explore the extent to which the costs of regulatory compliance are “visible”, i.e., reported explicitly by firms’ accounting system, and “hidden”, i.e., obscured under other cost categories. Econometric …