The Real Effects of Conflict Minerals Disclosures

78 Pages Posted: 23 Aug 2021 Last revised: 2 Dec 2021

See all articles by Bok Baik

Bok Baik

Seoul National University

Omri Even-Tov

Haas School of Business - UC Berkeley

Russell Han

University of Illinois at Urbana-Champaign

David Park

Seoul National University

Date Written: August 19, 2021

Abstract

Section 1502 of the Dodd–Frank Act requires Securities and Exchange Commission issuers to file conflict minerals disclosures (CMD) that indicate whether their product(s) contain tin, tungsten, tantalum, and gold that originate from the Democratic Republic of Congo and its nine neighboring countries (collectively referred to as “covered countries”). We examine the disclosures’ real effects on firms’ resourcing behavior and on regional conflict mitigation related to natural resources. Our analysis shows that CMDs compel companies to move toward responsible sourcing due to greater public attention, positive market reactions, and positive changes in socially responsible investor holdings, consistent with the reputational cost hypothesis. We also find that after the CMD rule takes effect, conflict incidence in the mining regions of the covered countries decreases relative to those of the non-covered countries. Overall, our evidence suggests that enhancing transparency regarding conflict mineral sourcing may help to alleviate a region’s resource curse.

Keywords: Real effects, Dodd-Frank Act, Conflict minerals disclosures, Nonfinancial disclosure, Corporate social responsibility, Responsible sourcing, ESG, Due diligence, Supply chain, Resource curse

JEL Classification: C23, D22, D74, G14, G18, G38, K2, L2, M41, M48, O13, Q34

Suggested Citation

Baik, Bok and Even-Tov, Omri and Han, Russell and Park, David, The Real Effects of Conflict Minerals Disclosures (August 19, 2021). Available at SSRN: https://ssrn.com/abstract=3908233 or http://dx.doi.org/10.2139/ssrn.3908233

Bok Baik

Seoul National University ( email )

Seoul
Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

Omri Even-Tov (Contact Author)

Haas School of Business - UC Berkeley ( email )

Haas School of Business
Berkeley, CA 94720
United States
3104302236 (Phone)

Russell Han

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

David Park

Seoul National University ( email )

Seoul
Korea, Republic of (South Korea)
+1 082101029564796 (Phone)

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