Grantee Research Project Results

2006 Progress Report: Corporate Responses to Information Disclosure: A Comparison of Public and Private Programs

EPA Grant Number: R832846
Title: Corporate Responses to Information Disclosure: A Comparison of Public and Private Programs
Investigators: Lenox, Michael , King, Andrew A. , Bennear, Lori Snyder
Institution: Duke University , Dartmouth College
EPA Project Officer: Hahn, Intaek
Project Period: May 1, 2006 through April 30, 2009
Project Period Covered by this Report: May 1, 2006 through April 30, 2007
Project Amount: $284,724
RFA: Environmental Behavior and Decisionmaking: Determining the Effectiveness of Environmental Information Disclosure and Provision (2005) RFA Text |  Recipients Lists
Research Category: Environmental Justice

Objective:

The primary objective of the proposed study is to assess the potential for public and private information disclosure programs to lead to improved environmental performance at both the facility and firm levels. In particular, we will examine the efficacy of both the U.S EPA’s Toxic Release Inventory and the private Global Reporting Initiative. We propose to construct a panel of U.S. manufacturing facilities and firms over the period 1987-2005 and to utilize difference in difference estimators to discern whether the reporting under these program lead to subsequent reductions in toxic releases. In the case of the TRI, we will leverage changes in reporting over the history of the program to generate comparative samples. In the case of the GRI, we will look to identify instruments and adopt two-stage models to help address concerns with selection. We expect to reveal not only whether these programs lead to reductions in releases on average, but also to identify the conditions under which these programs are more or less effective. Our hope is that through a comparative analysis of public and private information disclosure programs, we may identify complementarities between both approaches that will lead to novel and nuanced public policies with respect to information disclosure.

Progress Summary:

As proposed, effort during the first year of the grant has been primarily spent collecting and process data from the U.S. Toxic Release Inventory. One of the primary goals if this effort is to create reliable measures of facility and firm environmental performance and then to link these data with other datasets which provide important variables that may drive firm reactions to information disclosure requirements. Tasks included gathering data to link facilities with their corporate parents, collecting various toxicity-weighting schemes, aggregating data from the submission level to the facility and firm levels, and linking with data on the financial characteristics and performance of firms. We have also collected data on several different changes to TRI reporting requirements including requiring additional categories of facilities to report, requiring reports for additional chemicals, and lowering reporting thresholds for particular chemicals. These data are critical for identifying both a “treatment” group of facilities newly subject to the TRI requirements (e.g. a facility required to report for the first time or a facility reporting for a chemical for the first time) and a “control” group of facilities that have reported previously. We have nearly completed these data gathering and processing tasks and plan to begin analysis this summer.

In addition to processing data from the TRI, we conducted a preliminary analysis of the Global Reporting Initiative. In particular, we studied participation in the GRI among firms in the United States, the United Kingdom and Japan. Data on financial characteristics of the firms were available for all three countries from Compustat, MarketLine, Hoovers, and company websites. These data were collected for all participants in the GRI in these countries. A control sample was constructed by randomly selected companies stratified by industry and net sales resulting in a sample of 437 firms. A preliminary analysis of the data finds that, for the U.S. and U.K., the size of the firms in terms of total employees is a significant determinant of participation in the GRI. For the U.S. and Japan, proximity to consumers was also significant in firms’ decision to participate. This confirms the findings in previous studies on voluntary programs that the appeal to consumers is an important component of participation. Comparing the results of the U.S. and the other two countries suggests that the overall fit of the models improve by adding variables on environmental performance, but the effect of these variables on participation is relatively insignificant. Further analysis is necessary.

Future Activities:

We plan to begin analysis of the efficacy of the U.S EPA’s Toxic Release Inventory using the data constructed the past year in the latter part of this summer (2007). A large part of the initial effort will be spent refining our empirical model and beginning preliminary model estimation. The remainder of the second year of the project will be spent finalizing the empirical model specification and completing model estimation. We also plan to revisit our analysis of the Global Reporting Initiative, potentially collecting more data, and estimating additional models. Looking towards year three, we will begin the process of reporting our analyses and results with the target of generating peer-reviewed journal articles for submission later in the year. Reports will include individual analyses of the efficacy of both TRI and GRI, as well as a comparative analysis of the two programs.

Journal Articles:

No journal articles submitted with this report: View all 1 publications for this project

Supplemental Keywords:

public policy, analytical, information disclosure, corporate strategy,, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Social Science, Economics and Business, Corporate Performance, environmental behavior, public reporting, right-to-know programs, policy making, Globall Release Inventory, TRI, corporate environmental behavior, impact of federal policy instruments, environmental compliance determinants

Relevant Websites:

We have created a password protected portal to facilitate data exchange between members of the research team (see https://www.fuquaworld.duke.edu/www/fdq/fdq1.jsp Exit ).

Progress and Final Reports:

Original Abstract

2007

Final