What Impedes Oil and Gas Companies’ Transparency?

Paul M. Healy

Harvard Business School; National Bureau of Economic Research (NBER)

George Serafeim

Harvard University - Harvard Business School

November 17, 2011

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.

Number of Pages in PDF File: 32

Keywords: oil and gas, transparency, disclosure, corruption, expropriation, competition

JEL Classification: M14, M21, M40

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Date posted: November 19, 2011 ; Last revised: April 12, 2015

Suggested Citation

Healy, Paul M. and Serafeim, George, What Impedes Oil and Gas Companies’ Transparency? (November 17, 2011). Available at SSRN: http://ssrn.com/abstract=1961404 or http://dx.doi.org/10.2139/ssrn.1961404

Contact Information

Paul M. Healy
Harvard Business School ( email )
Soldiers Field
Boston, MA 02163
United States
617-495-1283 (Phone)
617-496-7387 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
George Serafeim (Contact Author)
Harvard University - Harvard Business School ( email )
381 Morgan Hall
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=15705
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