Voluntary, Self-Regulatory, and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments

Paul M. Healy; George  Serafeim

Article | Accounting Horizons | March 2020

Voluntary, Self-Regulatory, and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments

Abstract

Concerns about high rates of government corruption in resource-rich countries have led transparency advocates to urge oil and gas firms to disclose payments to host governments for natural resources. Transparency, they argue, can increase government accountability and mitigate corruption. However, we find a low frequency of voluntary disclosures of payments by oil and gas firms and negative stock price reactions for affected firms at the announcement of regulations mandating disclosure. This suggests that sample firm managers and their investors perceive that such disclosures generate private costs, despite any public benefits. We document that industry self-regulation has generated information to substitute for the gap in voluntary company disclosure and that such disclosures are accompanied by lower country corruption ratings. This suggests that collective action could be an effective way for companies to manage the private costs of disclosure and respond to public pressure for transparency that could provide public benefits.

Keywords: oil ＆ gas; corruption; transparency; self-regulation; industry self-regulation; regulation; disclosure; disclosure regulation; Energy Sources; Crime and Corruption; Corporate Disclosure; Governing Rules, Regulations, and Reforms; Energy Industry;

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Citation:

Healy, Paul M., and George Serafeim. "Voluntary, Self-Regulatory, and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments." Accounting Horizons 34, no. 1 (March 2020): 111–129.

Tiffany Pham taught herself to code and created a technology platform, Mogul, with the goal of providing girls and women around the world with information and opportunities. After several years Mogul had reached more than 146 million women around the world and had measurable outcomes in increasing the diversity of talent pipelines for major Fortune 500 companies that served as its clients. The case explores Pham’s journey in building Mogul and the idea of moving into other business lines, such as media or venture capital, making Mogul not just a place for people to connect but also a global brand.

Working Paper | HBS Working Paper Series | 2020

Corporate Environmental Impact: Measurement, Data and Information

George Serafeim, DG Park, David Freiberg and T. Robert Zochowski

As an organization’s environmental impact has become a more important societal consideration, thereby affecting industry and organizational competitiveness, interest in measuring and analyzing environmental impact has increased. We develop a methodology to derive monetized environmental impact estimates in a comparable way across companies by applying characterization pathways and monetization factors to organization level environmental outputs, including carbon emissions, water use, and other emission types. The median environmental impact as a percentage of an organization’s revenues, referred to as environmental intensity, is close to 2% and above 10% in 11 out of 68 industries, suggesting a significant level of ‘hidden liabilities’ and potential for value erosion if environmental impacts are priced. Close to 60% of the variation in environmental intensity is driven by industry membership, while approximately 30% can be attributed to firm specific factors, with the rest of the variation driven by country and more granular industry classifications. Environmental intensity exhibits significant, yet moderate correlation with various environmental ratings across industries and no correlation within industries. Finally, we find that environmental impact is moderately priced in equity valuation multiples, consistent with investors viewing environmental impacts as financially material and pricing them in some but not all industries.

Keywords: environment; Impact; measurement; ratings; valuation;

Citation:

Serafeim, George, DG Park, David Freiberg, and T. Robert Zochowski. "Corporate Environmental Impact: Measurement, Data and Information." Harvard Business School Working Paper, No. 20-098, March 2020. View Details

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Voluntary, Self-Regulatory, and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments

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