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Carrot or stick? An empirical analysis of the different implementation strategies of the EU directive on nonfinancial information across Europe
Journal article   Open access   Peer reviewed

Carrot or stick? An empirical analysis of the different implementation strategies of the EU directive on nonfinancial information across Europe

Chiara Mio, Marco Fasan, Carlo Marcon and Silvia Panfilo
Corporate social responsibility and environmental management, Vol.28(6), pp.1591- 1605
2021
Scopus ID: 2-s2.0-85101040652
Web of Science ID: WOS:000616724800001

Abstract

Assurance EU directive 2014/95 Fines Nonfinancial information disclosure Safe harbor
The recent EU Directive on nonfinancial information (NFI) disclosure allows Member States some discretion regarding its implementation. More specifically, it allows countries to decide whether: (a) information assurance is compulsory; (b) companies can waive NFI disclosure because of possible competitive harms (safe harbor); and (c) fines can be imposed on companies not disclosing NFI. We empirically test the impact of different implementation strategies on NFI quantity and quality, and we find that regulations providing incentives ('carrots') are more effective than regulations imposing costs ('sticks'). More specifically, while mandatory assurance and safe harbor have a positive impact on NFI quantity, fines do not. Our results contribute to the literature on NFI disclosure and inform regulators on the effectiveness of different implementation strategies.
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