Socially responsible sourcing and shareholder wealth – evidence from conflict minerals disclosures

Section 1502 of the Dodd-Frank Act mandates that issuers registered with the U.S. Securities and Exchange Commission conduct due diligence on their supply chains and submit Conflict Minerals Disclosures (CMDs), indicating if their products include tin, tantalum, tungsten, or gold originating from the Democratic Republic of the Congo or its neighboring “covered countries” afflicted by the resource curse. Utilizing data from CMDs between 2014 and 2018, I find that firms with socially responsible major corporate customers are more likely to embrace socially responsible sourcing (SRS) and to issue more readable CMDs. Moreover, I investigate whether SRS practices shield firms from supply chain risk increasing events. Exploiting as-if-random sources of variation in supply chain risk increasing events—news of conflicts that occur specifically in the mining regions of covered countries—I show that firms practicing SRS are insulated from the adverse impacts (e.g., imposition of reputation costs) of such news, while non-SRS firms are negatively affected by them. Overall, my evidence demonstrates how and why disclosure rules aimed at encouraging socially desirable outcomes benefit socially responsible firms.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Accountancy

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2024

Author dc:creator

• Han, Jong Won

Contributors dc:contributor

• Brown, Nerissa
• Godsell, David
• Urcan, Oktay
• Almeida, Heitor

• Dodd-frank Act
• Conflict Minerals Disclosures
• Nonfinancial Disclosure
• Corporate Social Responsibility
• Responsible Sourcing

Statement dc:rights

• Copyright 2024 Jong Won Han

Language dc:language

en, eng

Handle dc:identifier

https://hdl.handle.net/2142/124614

OAI record oai:identifier

https://www.ideals.illinois.edu/oai-pmh?verb=GetRecord&metadataPrefix=etdms&identifier=oai%3Awww.ideals.illinois.edu%3A2142%2F124614