The Effect of Mandatory Extraction Payment Disclosures on Corporate Payment and Investment Policies Abroad

70 Pages Posted: 10 Oct 2017 Last revised: 5 Dec 2019

See all articles by Thomas Rauter

Thomas Rauter

University of Chicago - Booth School of Business

Date Written: December 3, 2019

Abstract

I examine how mandatory extraction payment disclosures (EPD) ─ a policy solution intended to discourage corporate payment avoidance in the oil, gas, and mining industries ─ affect fiscal revenue contributions and investments by multinational firms in foreign host countries. Using the staggered adoption of EPD across firms headquartered in Europe and Canada, I find that disclosing companies increase their payments to host governments, decrease investments, and obtain fewer extraction licenses relative to non-disclosing competitors. The results are stronger for firms that face a high risk of public shaming, operate in corrupt host countries, and have a high exposure to bribery-prone payments, consistent with EPD increasing the reputational cost of corporate behavior that could be perceived as exploitative.

Keywords: Real Effects; Disclosure Regulation; Fiscal Revenues; Foreign Investment; Reputational Cost; Exploitation

JEL Classification: G14; G38; H20; H26; K22; L71; M41; M48; O10

Suggested Citation

Rauter, Thomas, The Effect of Mandatory Extraction Payment Disclosures on Corporate Payment and Investment Policies Abroad (December 3, 2019). Available at SSRN: https://ssrn.com/abstract=3049941 or http://dx.doi.org/10.2139/ssrn.3049941

Thomas Rauter (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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