Shedding Light on Stakeholder Power in a Regulated Market: A Study of Variation in Electric Utilities’ Climate Change Disclosures

Abstract

Extant theory posits that corporations disclose environmental information to maintain economic and legitimacy resources. Frequently, studies find that corporations prioritize the maintenance of economic resources when formulating their disclosure strategies. These studies generally assume competitive markets. Many polluting industries, however, do not operate in competitive markets. Accordingly, current assumptions of competitiveness may obscure potential explanations of disclosure. To remedy this oversight, I investigate how utilities vary their climate disclosures in response to regulatory, movement, and shareholder pressures within more monopolistic and oligopolistic markets. By using a mixed-effects model, I find that embeddedness in regulatory processes and movement targeting correlate to an increase in substantive disclosures. Interestingly, within monopolistic electricity markets, shareholder pressures do not lead to variation in substantiveness. As markets become more competitive, I find that shareholders resume their position of power. I argue these findings demonstrate that competition influences corporations’ perceptions of stakeholder power–implicating disclosure strategy.