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Political environment and voluntary disclosure in the U.S.: Evidence from the Carbon Disclosure Project
Author(s) -
Hoover Scott,
Fafatas Stephan
Publication year - 2018
Publication title -
journal of public affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.221
H-Index - 20
eISSN - 1479-1854
pISSN - 1472-3891
DOI - 10.1002/pa.1637
Subject(s) - acquiescence , politics , preference , voluntary disclosure , democracy , power (physics) , public disclosure , state (computer science) , public economics , business , accounting , economics , political science , law , microeconomics , quantum mechanics , mechanical engineering , physics , algorithm , computer science , engineering
We investigate whether the political leaning of the state where a given firm is headquartered is related to that firm's decision to voluntarily disclose climate change information. We study S&P 500 firms that were surveyed by the Carbon Disclosure Project (CDP) and find that firms headquartered in more Democratic states are more likely to disclose carbon emissions information to the CDP. Furthermore, firms in more Democratic states are more likely to permit public disclosure of their survey responses and tend to receive higher disclosure scores. We consider two political variables, one based on political power and one based on public political preference. Our results are consistent with political power driving the firm's willingness to voluntarily disclose information about climate change. These results suggest that the relation between the political environment and disclosure is more closely linked to concerns over regulatory threats as opposed to acquiescence to social norms.