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    Voluntary, Self-Regulatory, and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments
    21 Mar 2016Working Paper Summaries

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

    by Paul M. Healy and George Serafeim
    Throughout its history the oil and gas industry has been vulnerable to expropriation and corruption. To this day, oil and gas firms provide very limited voluntary disclosure on payments to host governments, and that pattern has not changed materially over time. This paper shows that industry-level self-regulation may be effective in enhancing transparency when individual firms are reluctant to voluntarily disclose payments.
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    Author Abstract

    Transparency advocates argue that disclosure of oil and gas company payments to host governments for natural resources is a public good, helping to reduce corruption and increase accountability in resource rich countries. Yet 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 there are private costs of such voluntary disclosures, contributing to continued low transparency and weak governance in resource rich countries. However, we document that industry self-regulation has generated information to substitute for the gap in voluntary company disclosure. We also find some evidence that these disclosures are accompanied by lower country corruption ratings, suggesting that collective action may be an effective way for the industry to manage the private costs of disclosure and respond to public pressure to improve governance in resource rich countries.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: March 2016
    • HBS Working Paper Number: 16-099
    • Faculty Unit(s): Accounting and Management
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    Paul M. Healy
    Paul M. Healy
    James R. Williston Professor of Business Administration, Emeritus
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    George Serafeim
    George Serafeim
    Charles M. Williams Professor of Business Administration
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