Abstract：The regulation of environmental risks increasinglyemphasi zes the awareness and empowerment of stakeholders. The success of this approach, however, seems to depend cruciallyon the qualityof environmental disclosures. In this paper we investigate the amount and qualityof the information that would be voluntarilyde livered to some stakeholder by a potential polluter. We find that information may be hazier when the stakeholder is confident (or naive) a priori, the cost of analyzing the received reports increases little with their complexity, or a polluter’s net expected payoff from undertaking an industrial activitythat would turn out to be unsafe is small. A worried stakeholder and a low cost of producing more accurate figures, on the other hand, favor disclosure of high-qualityinfor mation. Bydelivering information of verygoo d quality, safe firms can set themselves apart more easily from dangerous ones the higher the relative ex post payoff from their current industrial activity. Implications of this framework for the scope and design of public programs of environmental disclosure are brieflyexami ned.2003 Elsevier Science (USA). All rights reserved.
1. Introduction
2. The risk disclosure game
3. Main results
3.1. The confident stakeholder
3.2. The worried stakeholder
4. Relationships with the existing literature
5. Further extensions and policy issues
5.1. Mandatory standards for environmental disclosure
5.2. Taxes and subsidies
6. Concluding remarks
Acknowledgments
References
