Extracting transparency: the process of regulating disclosures for the resources industry

Abstract

PurposeMultinational resource companies (MRCs) are under pressure to become responsible corporate citizens. In particular, stakeholders are demanding more information about the deals these companies negotiate with the host governments of resource-rich nations, and there is general agreement about the need for industry commitment to transparency and the benefits that a mandatory disclosure regime would bring. This paper examines the production of one attempt to regulate disclosures related to payments between MRCs and the governments of nations with resource wealth: Section 1504 of the Dodd–Frank Act.Design/methodology/approachDrawing on Boltanski and Thévenot's (2006) Sociology of Worth, the authors examine the comment letters of participants in this process with a view to revealing how stakeholder groups produce justifications to promote their positions vis-à-vis transparency to regulators.FindingsThe authors show how justifications were mobilised by various constituents in an effort to shape the definition of transparency and the regulatory architecture that governs disclosure practices. In this case, the collective recognition of desirability of transparency enabled the SEC to suture together the views of constituents to create a shared understanding of the role of the common good as it relates to transparency.Originality/valueThis paper explores an alternative approach to the consideration of comment letters advanced during the process of disclosure-related rule-making. The authors show how a sophisticated regulator may be able to draw together elements stemming from different constituents in a way that appeals to a shared sense of the “common good” in order to produce Final Rules.

Political Grammars of Justification and Cost-benefit Analysis in Sec Rulemaking.

“…However, we find a similar discourse on societal and political consequences and their benefit or costs to the public in a public regulatory setting. This aligns with prior work suggesting a tension around the development of disclosure rules by the SEC when those rules are perceived as providing social benefits (Cortese and Andrew 2020).…”

“…This conflict also speaks to the potential societal and political implications of SEC rulemaking, implications that are often downplayed if not completely set aside in rulemaking. The discourse of private accounting standard setters suggests that societal and political consequences, and whether they are beneficial or costly to the broader public, are not the purview of private standard setters but issues of government regulators, like the SEC, who have a public rulemaking role (Baudot and Cooper 2019;Cortese and Andrew 2020). However, we find a similar discourse on societal and political consequences and their benefit or costs to the public in a public regulatory setting.…”

“…At the same time, conformance to market expectations alone ignores the SEC's implicit responsibility to consider the expectations of society more broadly in its role as a public, government regulator. Cortese and Andrew (2020) propose that the SEC reached a "justifiable compromise" with issuers by activating argumentation put forth by constituents on the SECs promulgation of a different Dodd-Frank mandate. Our work shows that despite what might appear to be a "justifiable compromise", the SEC is highly selective in mobilizing constituent argumentation in justifying the benefits and costs of the CM rule.…”

“…More closely related to the context of our study, prior research examines the SEC and external perspectives in relation to the Dodd-Frank disclosures. Cortese and Andrew (2020) explore the ways in which influential regulatees activate justifications to support their positions within the regulatory debates surrounding the rule for disclosure of government payments by resource extraction firms. They suggest that the SEC patched together the views of constituents from civic, industrial, and market worlds to reach a "justifiable compromise" of sorts with the regulatees.…”

Moral responses to uncertainty: The economies of worth towards a reconceptualization of decision making and management

“…Several studies have interpreted the design of formal structures, routines, and management control systems as compromises that enable organizations to continue and adapt in the presence of plural action and evaluation logics (Banoun, Dufour and Andiappan, 2016;Bérubé and Demers, 2019;Bobadilla and Gilbert, 2017;Bouillé and Cornée, 2017;Cloutier and Langley, 2017;Cortese and Andrew, 2020;Dahan, 2015;Kozica and Brandl, 2015;Marchal, 1992;Mesny and Mailhot, 2007;Rousselière and Vézina, 2009). A more radical view is that organizations can be designed not only to manage to variety, but to actively promote it: in fluid, unsettled contexts, the capacity to keep multiple logics in play through devices such as accounting, and to generate them through arrangements such as "heterarchical" organizations, is at a premium (van Bommel, 2014;Georgiou, 2018;Girard and Stark, 2003).…”