Voluntary, Self-Regulatory and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments

Transparency advocates argue that disclosure of oil and gas company payments to host governments for natural resources is a public good, helping to reduce corruption and increase accountability in resource rich countries. This leads us to examine unregulated, industry selfregulation, and government regulation of disclosure for the industry. Our findings indicate that sample firms and their investors perceive that there are private costs of voluntary disclosure of government payments, reflected in a very low frequency of voluntary disclosures and by negative stock price reactions for affected firms at the announcement of regulations mandating disclosure. However, industry self-regulation has created information to substitute for the gap in voluntary company disclosure. We find some evidence that such disclosures are accompanied by lower country corruption ratings, suggesting that collective action may be an effective way for the industry to manage the private costs of disclosure and respond to public pressure to improve governance in resource rich countries.