Article | Strategic Management Journal | October 2013

How Firms Respond to Mandatory Information Disclosure

by Anil R. Doshi, Glen W.S. Dowell and Michael W. Toffel

Abstract

Mandatory information disclosure regulations seek to create institutional pressure to spur performance improvement. By examining how organizational characteristics moderate establishments' responses to a prominent environmental information disclosure program, we provide among the first empirical evidence characterizing heterogeneous responses by those mandated to disclose information. We find particularly rapid improvement among establishments located close to their headquarters and among establishments with proximate siblings, especially when the proximate siblings are in the same industry. Large establishments improve more slowly than small establishments in sparse regions, but both groups improve similarly in dense regions, suggesting that density mitigates the power of large establishments to resist institutional pressures. Finally, privately held firms' establishments outperform those owned by public firms. We highlight implications for institutional theory, managers, and policymakers.

Keywords: information disclosure; institutional theory; environmental strategy; mandatory disclosure; environmental performance; Information; Corporate Disclosure; Governing Rules, Regulations, and Reforms; Performance Improvement; Environmental Sustainability; Manufacturing Industry; United States;

Citation:

Doshi, Anil R., Glen W.S. Dowell, and Michael W. Toffel. "How Firms Respond to Mandatory Information Disclosure." Strategic Management Journal 34, no. 10 (October 2013): 1209–1231. (Featured in U Penn's RegBlog.)