After 15 years of steady growth and expansion, Edita, a leading Egyptian snack producer, faced a series of challenges in the wake of the Arab Spring. In January 2011, the Egyptian Revolution sparked political and economic turmoil that reflected the waves of protest and violence already spreading throughout North Africa and parts of the Middle East. Hani Berzi, CEO of Edita, managed to navigate the company through this period, though the severe devaluation of the Egyptian pound in November 2016 meant yet another period of crisis for the country’s economy and, with it, the snack food industry. Hani was faced with a series of hard decisions that would determine Edita’s future. He held a crisis management meeting with his executive team and on the agenda were two key decisions. Should they increase their prices as a short-term strategy to survive the turbulent period at the risk of losing market share? Should Edita aim to diversify risk by tapping into underserved rural areas in Egypt or rather by expanding its presence in regional markets? Or, should the company adopt some combination of both strategies, or neither, and instead devise another course for addressing the crisis?
A key aspect of the governance process inside organizations and markets is the measurement and disclosure of important metrics and information. In this chapter, we examine the effect of sustainability disclosure regulations on firms’ disclosure practices and valuations. Specifically, we explore the implications of regulations mandating the disclosure of environmental, social, and governance (ESG) information in China, Denmark, Malaysia, and South Africa using differences-in-differences estimation with propensity score matched samples. We find that relative to propensity score matched control firms, treated firms significantly increased disclosure following the regulations. We also find increased likelihood by treated firms of voluntarily receiving assurance to enhance disclosure credibility and increased likelihood of voluntarily adopting reporting guidelines that enhance disclosure comparability. These results suggest that even in the absence of a regulation that mandates the adoption of assurance or specific guidelines, firms seek the qualitative properties of comparability and credibility. Instrumental variables analysis suggests that increases in sustainability disclosure driven by the regulation are associated with increases in firm valuations, as reflected in Tobin’s Q. Collectively, the evidence suggest that current efforts to increase transparency around organizations’ impact on society are effective at improving disclosure quantity and quality as well as corporate value.
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Pippa Tubman Armerding joined Harvard Business School in 2017, and is the Executive Director for the HBS Africa Research Center in Johannesburg, South Africa. Pippa’s work spans sub-Saharan Africa, with a particular focus on the development of cases and support for faculty research in the region. She also plays an important role in establishing and fostering relationships with companies and alumni in Africa on behalf of HBS.
A lawyer and strategist with 20 years of experience as an attorney and business professional operating across Africa, Europe and North America, Pippa has held a number of leadership roles with large multinationals working across the continent. Prior positions includes serving as Director of Legal and Corporate Affairs for Microsoft South Africa, and Director of Pan-African Strategic Initiatives for Coca-Cola South Africa.
As a graduate of Harvard College, Pippa has been an active alumnus, serving in a number of volunteer roles for the alumni community in South Africa. In addition, Pippa holds a JD from New York University, specializing in international law, and is fluent in French. Raised in Liberia, Pippa returned to Africa 13 years ago and has since lived in South Africa and Kenya.