Faculty Publications

Setting Materiality Thresholds For ESG Disclosures: A Case Study Of U. S. Mine Safety Disclosures

Document Type

Article

Keywords

Abnormal returns, Mineral policy, Mining, Safety disclosures, Sustainability

Journal/Book/Conference Title

Resources Policy

Volume

70

Abstract

This article examines whether the U.S. government's policy to require mining firms to disclose specified mine safety incidents produced the desired policy outcomes. This is accomplished by examining whether investors respond to mandatory periodic disclosures by coal mining firms as well as mine fatality incidents. Our results show that the market does not react to the safety incident disclosures. This is contrary to previous research that shows that markets react to safety disclosures made voluntarily by management, who presumably evaluate materiality prior to disclosure. Our results show mixed evidence on whether markets react negatively to mine fatality incidents. While we find limited evidence that markets react negatively to severe safety incidents with multiple fatalities, our work shows that for most cases with single fatalities, there is no evidence that markets react negatively. This work contributes to the discussion on appropriate environmental, social, and governance (ESG) disclosures by firms by examining the effectiveness of mandatory and voluntary disclosures. We recommend that future work examine whether markets react to more severe mine safety incidents and those in other industry sectors. Overall, this work shows that without adequate research to establish the optimal threshold for ESG disclosures, government's attempts to elicit mandatory disclosures are not likely to achieve the policy goals.

Department

Department of Finance

Department

Department of Management

Original Publication Date

3-1-2021

DOI of published version

10.1016/j.hnm.2020.200122

Repository

UNI ScholarWorks, Rod Library, University of Northern Iowa

Language

en

Link to Full Text

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