This study examines the effects of the US Greenhouse Gas (GHG) Reporting Program, which requires thousands of industrial facilities to measure and report their GHG emissions. It shows that facilities reduce their GHG emissions by 7.9% following the disclosure of emissions data. The evidence indicates that benchmarking—whereby facilities use the disclosures of their peers to assess their own relative GHG performance—spurs emissions reductions. Firms’ concerns about future legislation appear to motivate this behavior. Lastly, I find no significant evidence of emissions reductions due solely to the measurement and (nonpublic) reporting of emissions to the regulator; in this setting, public disclosure is important for generating real effects.
Featured in:
New York Times
US SEC Proposed Rule: The Enhancement and Standardization of Climate-Related Disclosures for Investors
Presented at:
NBER Conference on Measuring and Reporting Corporate Carbon Footprints and Climate Risk Exposure
University of Delaware Weinberg Center—ECGI Corporate Governance Symposium
We examine how information about the diversity of a potential employer’s workforce affects individuals’ job-seeking behavior. We embed a field experiment in job recommendation emails from a leading career advice agency in the U.S. The experimental treatment involves highlighting a diversity metric to jobseekers. Our results indicate that disclosing diversity scores in job postings leads jobseekers to click on firms with higher diversity scores, with such effects varying across jobseeker demographics. A follow-up survey provides evidence on potential explanations for why jobseekers value diversity information. We then examine how jobseekers’ preferences for diversity relate to disclosure choices under the U.S. SEC Human Capital Disclosure requirement. We find that firms in industries characterized by higher jobseeker responsiveness to diversity information tend to voluntarily disclose diversity metrics in their 10-Ks under these new disclosure requirements.
Featured in:
The Economist
Columbia Law School Blue Sky Blog
Insights by Stanford Business
Presented at:
2022 Journal of Accounting Research Conference
We study the effects of grade non-disclosure (GND) policies implemented within MBA programs at highly ranked business schools. GND precludes students from revealing their grades and grade point averages (GPAs) to employers. In the labor market, we find that GND weakens the positive relation between GPA and employer desirability. During the MBA program, we find that GND reduces students' academic effort within courses by approximately 4.9%, relative to comparable students not subject to the policy. Consistent with our model, in which abilities are potentially correlated and students can substitute effort towards other activities in order to signal GPA-related ability, students participate in more extracurricular activities and enroll in more difficult courses under GND. Finally, we show that students' tenure with their first employers after graduation decreases following GND.
Featured in:
Wall Street Journal
National Affairs
Marginal Revolution
Motivated by the FASB’s project on the disaggregation of income statement expenses, we study a Korean rule change that allowed firms to withhold a previously mandated disaggregation of Cost of Sales (CoS). We find that after withholding, firms’ profitability increases by 1.6 percentage points. Our industry-focused results suggest that withholding affects profitability by reducing the transfer of competitive information to peer firms. We then document a range of evidence consistent with the idea that firms withhold disaggregated CoS to protect cost-innovations from rivals. First, we construct a novel measure of firms’ cost innovative potential and show that it predicts withholding and subsequent profitability gains under the voluntary disclosure regime. Second, we document efficiency gains following the withholding of disaggregated CoS. Third, our survey-experiment of 1,257 US public firms’ managers shows that they would reduce investments in process/cost innovations if they were required to disaggregate CoS. Our study highlights to standard setters and academics that CoS disaggregation entails operational consequences for firms.
Does a firm’s route into a tax haven affect the tax savings generated? For U.S. firms, forming a haven subsidiary via a “haven acquisition” is associated with a 3.8 percentage point reduction in the cash effective tax rate. In contrast, the reduction is 1.4 percentage points when the haven subsidiary is formed organically. Haven acquisitions that generate greater economic substance in tax havens yield larger tax savings. For non-U.S. firms, haven acquisitions reduce the cash effective tax rate more when the home country scores higher on proxies for government quality and the enforcement of securities laws is weaker. M&A announcement returns show that investors price the expected tax savings of haven acquisitions into stock prices, helping to rule out alter-native explanations. Overall, our findings suggest that separately considering haven acquisitions is important when analyzing tax minimization strategies involving tax havens.
We:
study the effect of medium-term climate cycles on firm performance
examine whether firms incorporate climate forecasts into operations
triangulate our archival analysis using a survey of 1,578 mid-level managers at U.S. firms