Is Better Information Always Good News? International Corporate Strategy and Regulation

Kitzmuller, Markus

World Bank, Washington, DC

关键词: ACCESS TO INFORMATION;    ACCOUNTING;    ADVERSE EFFECTS;    ADVERTISING;    ARBITRAGE;   

DOI  :  10.1596/1813-9450-6251
RP-ID  :  WPS6251

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper develops a simple model toanalyze the interaction between strategic corporate publicgood provision, international firm location and nationalregulation. An information-based strategic corporate publicgood provision mechanism is proposed to shed light on recentfirm behavior within different regulatory environments. Themain insight derived is that in the presence of firms withgeographic flexibility (multinational enterprises) andmarket provision of an international public credence good,unilateral (non-cooperative) regulatory scope depends on (1)the absolute probabilities to verify firms' corporatepublic good provision levels within different geographic andinstitutional environments, and (2) the differential betweenthese probabilities across countries. The relativeinformation asymmetry determines not only the market levelsof the public good produced under autarky, but also therelocation incentives of multinational enterprises. A firmtrades off lower production costs, which increase itscompetitiveness in pricing, with higher expectedinformational price premiums, which decrease itscompetitiveness. A government's ability to regulateabove market (corporate public good provision) levelsdecreases with the absolute level of foreign transparency,while it increases in the relative (positive) differencebetween the same transparency at home and abroad. This maynot only explain mixed empirical evidence of theoreticpropositions such as the Pollution Haven Hypothesis andRegulatory Race to the Bottom dynamics, but also open upinteresting policy implications as the internationalinformation playing field becomes leveled throughdevelopment, while existing regulations are rather rigid,and policy coordination remains limited.