The Politics Of Environmental Disclosure Regulation In The Chemical And Petroleum Industries: Evidence From The Emergency Planning And Community Right-To-Know Act Of 1986

We draw from prior research in political science, management, and accounting to develop a basis from which to examine how corporations try to influence legislation and legislators for their self-interest and deviate from their expected accountability [see Gray R, Owen D, Adams C. Accounting and accountability: changes and challenges in corporate social and environmental reporting. London, UK: Prentice Hall; 1996; Gray R, Dey C, Owen D, Evans R, Zadek S. Struggling with the praxis of social accounting: stakeholders, accountability, audits and procedures. Accounting, Auditing & Accountability Journal 1997;10(3):325-64]. Specifically, we investigate how PAC contributions, a type of corporate political strategy, can be used as a tool for business entities to deviate from their reporting responsibility. The Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA) was drafted and passed immediately following the 1984 Union Carbide gas leak incident in Bhopal, India, as a result of rising environmental concerns and demand for right-to-know regulation. Among other pollution prevention policies and regulations, one feature of this legislation requires firms from certain industries to publicly disclose information related to their toxic chemical releases. This study provides empirical evidence that affected firms were already striving to reduce or mitigate environmental disclosure regulations, using political avenues, despite global environmental crises. The analysis finds that a sample of firms from the chemical and petroleum industries made significant campaign contributions to legislators deemed influential in the passage of the EPCRA. Moreover, we report that this use of political strategy, evidenced by the relatively high amount of contributions, may have affected the roll-call vote on the passage of an EPCRA disclosure-related amendment. Our results are consistent with the argument that firms that will be affected by pending regulations become actively involved in politics to reduce public policy pressure and exposure. © 2007 Elsevier Ltd. All rights reserved