Anne Jacqueminet, from Università Bocconi - Milano; will present "Transparency is Not Donkey Work: Firm Political Orientation and Carbon Disclosure"

Abstract: Increasingly, firms are expected to communicate on their climate impacts, as well as the actions they implement to mitigate them. We argue that due to the highly politicized nature of climate change, corporate leaders' political orientation shapes a firm’s disclosure strategy and does so in a somewhat paradoxical way. We suggest, on the one hand, that more liberal corporate leaders’ intrinsic and extrinsic motivation generally leads to greater disclosure, increasing transparency. On the other hand, the same drivers that foster increased disclosure for more liberal firms also bring about an unintended consequence of more strategic disclosures when insufficient climate actions are revealed. This is because more concerned liberals experience a heightened tension between transparency and performance due to higher internal and external performance expectations. As a result, with unfavorable news, the level of transparency may actually be lower for more liberal firms that care about climate change than for more conservative firms. Our empirical study, based on a sample of 410 U.S. firms over eight years, provides evidence for these effects. Our additional analyses confirm that negative news is penalized by environmental raters, in particular when delivered by a firm with a more liberal orientation, providing an incentive to engage in strategic disclosure