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

42 Pages Posted: 19 Nov 2011 Last revised: 19 Nov 2017

See all articles by Paul M. Healy

Paul M. Healy

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

George Serafeim

Harvard University - Harvard Business School

Date Written: July 1, 2015

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 very low frequency of voluntary disclosures of payments to host governments 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 the 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 increased transparency that could provide public benefits.

Keywords: oil and gas, transparency, disclosure, corruption, competition, self regulation, regulation

JEL Classification: M14, M21, M40

Suggested Citation

Healy, Paul M. and Serafeim, George, Voluntary, Self-Regulatory and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments (July 1, 2015). Available at SSRN: https://ssrn.com/abstract=1961404 or http://dx.doi.org/10.2139/ssrn.1961404

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

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