Shareholder wealth effects of modern slavery regulation
Research output: Contribution to journal › Article › peer-review
Abstract
We examine the shareholder wealth effects of the adoption of the UK Modern Slavery Act 2015 (MSA). The MSA’s Transparency in Supply Chains clause introduced new reporting requirements mandating certain firms to provide an annual statement outlining how they identify and mitigate modern slavery in their business and supply chain. An event study of stock price reactions of UK firms covered by the MSA to eight events associated with its adoption provides no evidence of abnormal stock returns. We do, however, uncover significant cross-sectional differences in stock price reactions, with results suggesting that the MSA provides a competitive advantage to firms with a demonstrated track record of addressing slavery risk. We find no effects for pre-regulatory Corporate Social Responsibility disclosure levels on stock price reactions. Our findings highlight the economic value of maintaining socially responsible sourcing practices, and inform the current policy debate on the importance of greater transparency in corporate supply chains.
Bibliographical metadata
Original language | English |
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Pages (from-to) | 5265-5289 |
Number of pages | 25 |
Journal | MANAGEMENT SCIENCE |
Volume | 66 |
Issue number | 11 |
Early online date | 26 May 2020 |
DOIs | |
Publication status | Published - 26 May 2020 |