Accounting Theories and Capital Market Reaction: Boral Limited

This report examines the capital market reaction of Boral Limited, a construction materials manufacturing company, in relation to its corporate social responsibility (CSR) initiatives. The analysis explores Boral's CSR activities, including health, safety, and environmental practices, community impacts, and climate considerations. The report applies relevant accounting theories and models, such as the Fair Presentation/Full Disclosure Model, Abt's Model, and Ralph's Comprehensive Social Benefit Cost Model, to assess the motives, effectiveness, and impact of Boral's CSR disclosures. It delves into the company's performance regarding employee safety, environmental compliance, community engagement, and carbon emissions. The report highlights Boral's efforts to reduce greenhouse gas emissions, promote efficient energy use, and manage community impacts. It also discusses the use of the Abt's Model to provide social information in a quantitative method. The report concludes with recommendations for CSR reporting at both the corporate and regulatory levels, emphasizing the effectiveness of CSR disclosures. It also provides an overview of Boral Limited's business strategy and financial performance.

Running head: CAPITAL MARKET REACTION
Capital Market Reaction
Name of Student
Name of University
Author’s Note

1CAPITAL MARKET REACTION
Table of Contents
Background......................................................................................................................................2
Aim..................................................................................................................................................2
Scope................................................................................................................................................2
Health, Safety and Environment......................................................................................................2
Analysis of Health, Safety and Environment..................................................................................3
The Fair Presentation/Full Disclosure Model:.................................................................................3
Community Impacts.........................................................................................................................4
Analysis of Community Impacts.....................................................................................................4
Abt’s Model.....................................................................................................................................4
Climate.............................................................................................................................................5
Analysis of the Climate...................................................................................................................5
Ralph’s Comprehensive Social Benefit Cost Model.......................................................................5
Conclusion.......................................................................................................................................6
Recommendation.............................................................................................................................6
Reference.........................................................................................................................................7

2CAPITAL MARKET REACTION
Background
The sustainability or corporate social responsibility has a massive impact on the business
strategy and the brand name of a company. It is observed and analysed that the company who
have better corporate social responsibility policies has a direct effect on the financial structure of
the company. Boral Limited has a well-defined business strategy which has an immediate impact
on the sustainability of the company (Scandizzo and Ferrarese 2015). Boral Limited recognises
the responsibility of the shareholders by providing the deliver value creation and long-term
sustainability. Boral Limited’s corporate social responsibility includes health, safety and
environment, environment and community impacts. The report discusses the activities which are
performed by Boral Limited on this corporate social responsibility matters.
Boral Limited is the manufacturing company which are producing construction material
and also making buildings. Headquarter of Boral Limited is located in Sydney, Australia. As per
2017 data, it can be analysed that the company sold $4.39 billion. Boral has a total of 16000 full-
time employees. The company has total operating 700 operating sites. Boral has intervened in the
big and competitive markets like the United States of America and Asian counties also. Boral
Limited has complete three divisions, namely Boral Australia, UGC Boral and Boral North
America. Boral is the demerged company from previously known Boral Limited in the year
2000. After listing with Australian Stock Exchange (ASX), Boral changed their name to Boral
Limited.
Aim
Aim of the company determines the company’s future goal and also the chosen path. The
objective of Boral Limited is to build something great, which is across our international
geographies with high-quality, innovative sustainable building products and construction
materials. Boral aims to provide a better experience to the customers, shareholders and investors
of the company.
Scope
This report has focused mainly on the accounting theories which are invented to simplify
the accounting procedures which are practiced by different corporations in Australia. Accounting
theories also help to ease the method of maintaining the business records and also helps to create
the financial statements of the company. The valid accounting theories help the company to
provide compelling evidence in terms of legality is concerned.. .
Health, Safety and Environment
Boral Limited has implemented the Zero Harm policy for the employees and the other
people outside. The company is more focused on eliminating the behaviour and the conditions
which may harm the employees during the working time. Line-managers of Boral take care of
this matters as the manger is responsible for the day to day operations and looks after the issues
(Mook 2014). The line-manager is supported by the dedicated team, which includes corporate
social team which is headed by the directors of Health, Safety and Environment (HSE). The
corporate team has the responsibility which are abiding by the policies, governance and
functional leadership which is consulted by divisional specialists and administration. Each part
of the board has the responsibility to implement the respective programs and training session to

3CAPITAL MARKET REACTION
the line managers. Each division of Boral Limited has different policies regarding the health,
safety and environment strategies and plans (Foo 2017).
Analysis of Health, Safety and Environment
As per the report suggest it can be observed that no fatal issue rose since from the year
2013. It is the most extended fatality-free period recorded which is helping to make them work
hard. As per the report, it can be observed that the lost time frequency rate (LTFR) of 1.5 is
slightly higher than the previous year, which was 1.3 in the last year. In this year the lowest
RTFR are recorded of 7.3. In other subsidiaries, the company has seen the smallest drop of 0.3
and 0.8. The performance of the company concerning the safety of the employees rated as very
high. The above chart explains the safety performance and initiatives, which includes case
studies. As per the table Boral North America has performed very well and Boral Australia also
able to bring down the problem regarding the injury. Altogether it can be explained that Health,
Safety and Environment committee has done well which helped them to rise high but in Asia
their performance regarding the health and safety is pretty low than other part.
The Fair Presentation/Full Disclosure Model:
The Fair Presentation/Full Disclosure Model which could also be referred to as the
British-American model or Anglo-Saxon or Anglo-American Model, is used to describe the
approach applicable in the United Kingdom and United States, where accounting is oriented
toward the decision needs of large numbers of investors and creditors. This model of accounting
is oriented toward the decision needs of external investors. Under this model, financial
statements enable investors to evaluate management performance and to predict future cash
flows and profitability. The primary source of fund for this kind of model is the stock exchange
market. The financial market enables ordinary shares and bonds to be exchanged frequently.
Thus, allowing the companies to raise a considerable amount of capital from the market.
Boral Limited has policies regarding the environmental legislation, regulations, standards
and codes. The company is using minimum requirement in each of the communities that can be
operated. Boral Limited has compliance with site-based planning for the regulation of the
environment. The company also takes approval and management of sensitive sites which is
critical for our reputation that can operate. The company was interested in reducing greenhouse
gas emissions, which originates during the operations. The company also focused on the efficient
use of energy that helps to reduce the problems. The company also looks after the conservation
of water which is the rising problem in the environment. The environmental issues are also
looked after by the Health, Safety and Environment department of the company. The Executive
committee directly heads any problems which happened regarding the situation. Any material
issue regarding the environment is discussed in the board meeting even though there is no
penalty involved. This requires a well-balanced accounting system which can assist the directors
to reorganize the cost and expenditures that required for the environment issues fixation. For
many years the board of the company has focused on reducing the greenhouse gas in the
environment. The board looks after the emissions of the greenhouse gases by reducing the usage
of the procedure that may harm the environment. Boral Limited also focuses on reducing the use
of efficient energy, which includes re-use of waste energy and also uses the method of re-use
material. To take such decision the company needs to change the manufacturing process. As the
operation line changes the company need to spend some hefty which can be compensated by
raising the capital from the market against the shares. In this scenario the full disclosure model

4CAPITAL MARKET REACTION
can be beneficial as it can manage the accounts very efficiently and ultimately keep the balance
between the profit and the social responsibility of the company.
Community Impacts
Boral Limited are socially responsible for the committee, which can operate in the
Community. The company created a policy to improve the interaction of the company with the
local stakeholders of the company. The company is trying to engage with the community so the
company can deliver to the community something more than the job. The company also invests
some amount in managing the site operations, which do not negatively affect the community
amenity. The operational issues on which the company takes interest are traffic, noise, dust,
water and impacts of heritage and culture (Barambu, Babangida and Alex 2014). The company
usually takes part in the community service where they tend to plan strategically to mitigate and
manage effects which are across the life cycles and processing sites. Boral Limited always
focuses on the essential factor which is related with the community of the engagement efforts.
The company mainly does these types of programs on the communication, consultation and
contribution of the programs.
Analysis of Community Impacts
Boral Limited has got a considerable issue regarding the community due to their nature of
business, which automatically kinds of pollute the environment. Boral Limited are mainly
responsible for creating the air pollution, water pollution and noise pollution. The activity of the
company disrupts the environmental peace and also affects the landscape including the residents
of the area. The company has tried many aids to reduce such problems but it requires well
balanced financial position of the company, so that it can support the aids of disruption of the
community peace issue.
Abt’s Model
In this model social information are being provided in a quantitative method, which are
presented in the social information. This model consists of two parts social income statement and
social balance sheet. There are many companies around the world who has adopted the model in
their system and provide the financial statement on the basis of this model. This model helps
many companies to manage the financial health as well as the social activity of the company. As
the importance of the social activity of the company are increasing day by day, the companies
are adopting this model so that they can balance the financial health as well as prioritize the
social activity of the company as well. There is a community consultation committee established
at critical sites. The company also communicates through online with the concerned persons
regarding any kind of issues which are related with the communication. There are many ways to
determine the factors like mail drops, advertising and also provide the community inspections
and also guide the site tours. Boral also acknowledged as the industry leader in community
engagement which was awarded as the Community Leadership Award in 2016. The company
has invested almost $60,000 for community partner Habit for Humanity Australia. The company
was involved in many other community partners and approximately $8, the company provides
40,000 financial supports to these communities. The company was involved in fundraising
events, where the company has invested almost $92,000. In October 2016 Boral supported 24
employees to build their homes for a disaster-prone community in the rural areas of the country.
Boral is responsible for the critical part of the construction of the supply chain in the markets.
The company went on to provide more roles over the changes in the policies regarding the

5CAPITAL MARKET REACTION
development of the community (Foo 2017). The company is still working on the different
aspects such as using the external waste and by products; working with the customers of the
company to deliver the Green Star energy and sustainable goals, the company is also focused on
the matters like changing demographic. The company is trying to improve the construction
method in Asia. This is done by providing the broadening of products and systems which are
offering to the plasterboard, they are also focused in improving the supply chain management by
implementing the innovative way in the solutions. Abt Model helps the company to create a
separate financial statement for the social involvement of the company and efficiently portray
every kind of transactions which are conducted throughout the social work.
Climate
Boral Limited look after the carbon emission made by the company in a single year. As
carbon emission in the environment increases, the level of carbon dioxide also increases in the
environment which is responsible for the increasing of the greenhouse gas in the environment.
This greenhouse will lead to the rise in the global warming of our planet (Foo 2017). As per the
report stated by Boral Limited the company is also responsible for CHG emissions which also
impact the environment drastically. There was another issue regarding the making of cement in
the factory. Due to the making of cement, the company was producing the carbon which is way
above than the permissible rate and hence the company has to face some serious issue regarding
the carbon emissions. The company replaces the cement with fly ash and thus changing the
whole manufacturing line in the process,
Analysis of the Climate
Boral Limited has adopted climate related goals which are looking after by Boards of
Directors of the company. The target includes reduction of the emissions by 10 % to 20 % within
2023. The company also aims to reduce the carbon dioxide emissions. The company is trying to
bring down the usage of the pollution creating product so that the emissions of the carbon
dioxide can bring down. The new technology where the fly ash are being used instead of the
cement for manufacturing helps the company to bring down the change.
Ralph’s Comprehensive Social Benefit Cost Model
Ralph shown the different view which includes sacrifice the economic and non-economic
which are made by the society that are paid for the cause of the social cost Ralph has created a
way where the accounting model which includes corporate unit as well as the society as a whole.
Boral Limited mainly emphasis on the utilities which are produced and utilities which are
consumed by reporting the entity almost on the other hand social benefits and the social costs for
the purpose of the society. Ralph tried to maintain the balance between the financial reporting
and social reporting on the view point of the society as large. As per Ralph, resources stated
significant indirect effects which are associated with the inputs. There are significant indirect
effects which are associated with outputs. The model also sates the basis for measurements and
estimations and it also includes the progress in areas of current social concern. Thus it helps to
relate the social cause and the accounting in a very efficient manner. Ralph’s model helps to
show the sacrifice which are made by the company for the society. This helps to manage the
expense which is dedicated for the purpose of social work. Boral Limited has adopted the risk
management process for the reduction in carbon related matters (Campoy-Muñoz, Cardenete and
Delgado 2017). The company has incorporated different measures in its system which helps

6CAPITAL MARKET REACTION
them to reach the target in the designated time period. Ralph model is one of the best accounting
models which can help to analyses the risk management process related with the carbon emission
of the company. Ralph accounting model also helps the company to allocate the finance for the
changing of the production line that will reduce the pollution that made by the company.
Conclusion
As per the above discussion it can be concluded that Boral Limited has considerable
amount of share in the corporate social benefit. The accounting model like Abt’s model, Ralph’s
model and disclosure model are created for the purpose of the portraying the amount expenses
made for the society. These models help the companies to identify the expense for the social
responsibility of the company. It also helps the company to utilize the raised capital for the better
issue which may benefit to increase the goodwill of the company.
Recommendation
Hence it can be recommended that Boral limited apart from doing business have also
involved in social servicing like helping out the poor community both financially and with
resources. Therefore the recommendation will be as follows-
 The company has to put more emphasis over contributing to the society and community.
 The Boral limited needs to invest more money to the improvement of the society.
 In order to gain sustainability in the business the company may look to invest to uplift the
educations system; social and environmental awareness etc. hence in this way the
company could look to implement the corporate social responsibility.

7CAPITAL MARKET REACTION
Reference
Barambu, A.U., Babangida, M.M. and Alex, A.A 2014, An Assessment of the Impact of
Corporate Social Responsibility on Corporate Image of a Firm: Evidence from LAFARGE PLC.
Boral, S., 2016. Domain III: Stakeholder Engagement. In Ace the PMI-ACP® exam (pp. 127-
166). Apress, Berkeley, CA.
Campoy-Muñoz, P., Cardenete, M.A. and Delgado, M.C., 2017. Economic impact assessment of
food waste reduction on European countries through social accounting matrices. Resources,
Conservation and Recycling, 122, pp.202-209.
Croes, R. and Rivera, M.A., 2017. Tourism’s potential to benefit the poor: A social accounting
matrix model applied to Ecuador. Tourism Economics, 23(1), pp.29-48.
Deegan, C. and Shelly, M., 2014. Corporate social responsibilities: Alternative perspectives
about the need to legislate. Journal of Business Ethics, 121(4), pp.499-526.
Foo, M., 2017. A review of socially responsible investing in Australia. An independent report for
National Australia Bank (NAB) by the Australian Centre for Financial Studies (ACFS) at
Monash Business School.
GITTelMAN, S., Lange, V., Cook, W.A., Frede, S.M., Lavrakas, P.J., Pierce, C. and Thomas,
R.K., 2015. Accounting for social-desirability bias in survey sampling: A model for predicting
and calibrating the direction and magnitude of social-desirability bias. Journal of Advertising
Research, 55(3), pp.242-254.
Hueske, A.K., Endrikat, J. and Guenther, E., 2015. External environment, the innovating
organization, and its individuals: A multilevel model for identifying innovation barriers

8CAPITAL MARKET REACTION
accounting for social uncertainties. Journal of Engineering and Technology Management, 35,
pp.45-70.
Klikauer, T., 2014. Human resource management and Kohlberg’s scale of moral
development. Philosophy of Management, 13(1), pp.73-95.
Llop, M. and Manresa, A., 2014. Comparing the aggregation bias in the input–output model and
the social accounting matrix model. Applied Economics Letters, 21(11), pp.795-800.
Mook, L., 2014. An integrated social accounting model for nonprofit organizations.
In Accountability and Social Accounting for Social and Non-Profit Organizations (pp. 197-221).
Emerald Group Publishing Limited.
Ngô Thị, L., 2014. IMPACTS OF CORPORATE SOCIAL RESPONSIBILITY ON THE
FINANCIAL PERFORMANCE OF THE FIRMS (Doctoral dissertation).
Scandizzo, P.L. and Ferrarese, C., 2015. Social accounting matrix: A new estimation
methodology. Journal of Policy Modeling, 37(1), pp.14-34.