Working Paper | HBS Working Paper Series | 2013

What Impedes Oil and Gas Companies' Transparency?

by Paul Healy and George Serafeim


We examine determinants of oil and gas companies' transparency on performance and government payments in host countries of operation. Holding a firm-year constant and varying the host country, we find that proprietary costs of disclosure, both in the form of political and product market competition costs, impede transparency. Specifically, transparency on performance is lower in host countries with a history of nationalizations. These political costs are mitigated for state-owned oil firms. Performance transparency is also lower in host countries where few oil and gas firms operate, consistent with disclosure in such regions revealing proprietary information to competitors. Transparency on government payments is higher in more corrupt host countries, consistent with companies responding to a demand for information in more risky regions. Moreover, the relation between government payment transparency and host country corruption is mitigated by host government transparency about oil and gas payments, suggesting that companies increase their government payment transparency in host countries that are both corrupt and opaque.

Keywords: Crime and Corruption; Corporate Disclosure; Financial Reporting; Energy Industry;


Healy, Paul, and George Serafeim. "What Impedes Oil and Gas Companies' Transparency?" Harvard Business School Working Paper, No. 12-038, November 2011. (Revised July 2013.)