Firm Value Effects of Targeted Disclosure Regulation: The Role of Reputational Costs

70 Pages Posted: 18 Jul 2018 Last revised: 9 Aug 2019

See all articles by Katharina Hombach

Katharina Hombach

Carl von Ossietzky University of Oldenburg

Thorsten Sellhorn

Ludwig-Maximilians-Universitaet (LMU) Munich

Date Written: June 28, 2018


We study the reputational costs of targeted disclosure regulation – disclosure requirements aimed at policy objectives outside of securities regulators’ traditional missions. This emerging type of disclosure regulation empowers civil society to deter firms’ illicit actions. Our setting is the SEC’s extraction payments disclosure rule, which requires oil and gas firms to publish details about their payments to host governments. Consistent with reputational costs imposed on affected firms, our event-study results document that the rule’s negative effect on firm value is stronger where greater reputational risk makes firms more vulnerable to public pressure. Our qualitative field evidence suggests that reputational costs arise because the required disclosures facilitate pressure groups’ campaigning. These findings are robust to several alternative explanations and research design choices.

Keywords: Disclosure Regulation, Reputational Cost, Pressure Groups, Oil and Gas, Public Scrutiny

JEL Classification: K22, M41

Suggested Citation

Hombach, Katharina and Sellhorn, Thorsten, Firm Value Effects of Targeted Disclosure Regulation: The Role of Reputational Costs (June 28, 2018). Available at SSRN: or

Katharina Hombach (Contact Author)

Carl von Ossietzky University of Oldenburg ( email )

Ammerländer Heerstraße 114-118
Oldenburg, 26129

Thorsten Sellhorn

Ludwig-Maximilians-Universitaet (LMU) Munich ( email )

Ludwigstr. 28 RG IV
Munich, Bavaria 80539
+49(0)89-21806264 (Phone)
+49(0)89-21806327 (Fax)


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