Information Disclosure Policies: Evidence From the Electricity Industry

Abstract

A "third wave" of environmental policy has recently emerged that emphasizes information provision as an integral part of the risk mitigation strategy. While theory suggests that information programs may correct market failures and improve welfare, the empirical effectiveness of these programs remains largely undetermined. We show that mandatory information disclosure programs in the electricity industry achieve stated policy goals. We find that the average proportion of fossil fuels decreases and the average proportion of clean fuels increases in response to disclosure programs. However, the programs also produce unintended consequences. Customer composition and pre-existing fuel mix significantly affect program response, suggesting that effective information disclosure policies may not be efficient.

Student satisfaction, league tables and university applications: Evidence from Britain

“…One is work concerned with the role of signals in informing consumer choice within settings where potential consumers find it difficult to judge quality (Daughety and Reinganum, 2008;Dranove and Jin, 2010;Nelson, 1970;Spence, 1973). Our findings add to a growing body of literature which investigates how consumer demand is affected by standardised quality indicators provided by external parties in areas such as schooling (Hastings and Weinstein, 2008), health care (Cutler et al, 2004;Werner et al, 2012) and the environment (Delmas et al, 2010). Additionally, the article is instructive for recent debates in economics about salience, and the propensity of market actors to pay disproportionately more attention to information presented in some formats than others (Chetty et al, 2009;Falkinger, 2008;Hirshleifer and Teoh, 2003).…”

Saving power to conserve your reputation? The effectiveness of private versus public information

“…Public information has already become a valuable tool in encouraging corporations to behave in a more environmentally friendly manner (see for example Delmas et al, 2009), but it has also been abused in this environment with firms engaging in "green-washing", by reporting only selective information in voluntary disclosure programs (Delmas and Burbano, 2011;Lyon and Kim, 2011). This is a particularly salient issue for the implementation of any consumer-orientated public information program.…”

“…Prosocial reputation has been shown to be a significant motivator for charitable donations (Ariely et al, 2009), volunteer firefighting (Carpenter and Caitlin Knowles, 2007), blood donation (Lacetera and Macis, 2010), solar panel purchases (Lessem and Vaughn, 2011;Dastrup et al, 2012) and hypothetical green purchases (Griskevicius et al, 2010). In the corporate world, Jin et al, 2003 found that mandatory hygiene cards positively affected restaurant quality and health outcomes, while Delmas et al (2009) found that mandatory disclosure over utility electricity generation fuel mix percentages resulted in an increase in cleaner fuels. Observability of cooperative behavior has been shown to increase participation in demand response programs allowing the electric utility to remotely restrict the energy consumption during peak hours (Yoeli et al, 2013).…”

“…1 The mass rollout of smart energy meters, with over 76 million already installed worldwide, allows utilities to provide improved feedback to consumers about the impacts of their energy consumption (Fischer, 2008). 2 Mandatory and voluntary corporate disclosure systems are increasingly being used to replace or augment environmental government regulation (Khanna, 2001;Delmas et al, 2009), with common examples including the Toxics Release Inventory, lead paint disclosures, drinking water quality notices, and the international Environmental Management Standard ISO 14001 (Delmas and Montes-Sancho, 2011). Yet despite the popularity of environmental information policies, we still have little understanding of their effectiveness.…”

Market Reaction to Mandatory Nonfinancial Disclosure

“…Ioannou and Serafeim (2015) finds that firms in four countries (China, Denmark, Malaysia, and South Africa) not only increase disclosure, but also seek assurance of those disclosures and adopt reporting guidelines that increase comparability of disclosed information. Other research reveals that mandatory disclosure programs have forced companies to improve their operating performance relating to the environment (Delmas, Montes-Sancho, and Shimshack 2010) or food and water safety (Bennear and Olmstead, 2008;Jin and Leslie, 2003). However, no research examines investor perceptions of the expected costs and benefits to the announcement of regulations mandating such nonfinancial disclosures.…”