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How Firms Respond to Mandatory Information Disclosure

  • Anil R. Doshi

    ()

    (Harvard Business School)

  • Glen W.S. Dowell

    ()

    (Johnson School of Management, Cornell University)

  • Michael W. Toffel

    ()

    (Harvard Business School, Technology and Operations Management Unit)

Mandatory information disclosure regulations seek to create institutional pressure to spur performance improvement. By examining how organizational characteristics moderate establishments' responses to a prominent environmental information disclosure program, we provide among the first empirical evidence characterizing heterogeneous responses by those mandated to disclose information. We find particularly rapid improvement among establishments located close to their headquarters and among establishments with proximate siblings, especially when the proximate siblings are in the same industry. Large establishments improve more slowly than small establishments in sparse regions, but both groups improve similarly in dense regions, suggesting that density mitigates the power of large establishments to resist institutional pressures. Finally, privately held firms' establishments outperform those owned by public firms. We highlight implications for institutional theory, managers, and policymakers.

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Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 12-001.

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Length: 53 pages
Date of creation: Jul 2011
Date of revision: Jun 2012
Handle: RePEc:hbs:wpaper:12-001
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