This study considers the need for an accounting reporting system that provides more useful information to investors by analyzing the securities market's reaction to toxic waste spills by U.S. semiconductor manufacturers. To investigate whether the future cash outflows resulting from pollution spills by polluting firms are rationally discounted and reflected in securities prices at the time of spill discovery (rational expectations), the correlation between the expected cleanup costs from pollution spills and the magnitude of the securities market reaction at the time of discovery is analyzed. The empirical results indicated that a significant correlation exists, which was interpreted as evidence that specific information about pollution spills plays an important role in investors' firm valuation. Furthermore, based on these empirical results, accounting treatment methods for pollution (e.g., contingent loss) were also examined.