How Firms Respond to Mandatory Information Disclosure
Harvard Business School
Cornell University - Johnson Graduate School of Management
Michael W. Toffel
Harvard Business School (HBS) - Technology & Operations Management Unit
June 22, 2012
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 12-001
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.
Number of Pages in PDF File: 53
Keywords: information disclosure, institutional theory, environmental strategy, mandatory disclosure, environmental performance
Date posted: July 6, 2011 ; Last revised: June 28, 2012
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