The Political Origins of Corporate Transparency: Limiting Business Power by Locking in Strange Coalitions
Open AccessCorporate transparency laws, regulations, and standards have proliferated worldwide over the last three decades. Politicians, activists, and citizens alike seek access to information about labor rights violations, negative environmental impacts, data privacy practices, and a myriad of other issues from specific firms and across entire industries. But most business interest groups prefer secrecy to openness and oppose corporate transparency laws that would expose their activities. Becoming more transparent is often materially and/or reputationally costly, and the concentrated costs of collecting and sharing information faced by disclosing businesses often generate diffuse societal benefits that are difficult to measure. Yet some business interest groups not only support greater corporate transparency, but they also lobby national governments in favor of adopting corporate transparency laws contrary to these assumptions. Moreover, some countries have adopted corporate transparency laws despite ongoing opposition from structurally powerful industry groups. Why do some business interest groups support corporate transparency laws, and how do these groups influence the domestic adoption of international corporate transparency standards?Drawing from historical institutionalism and theories of economic regulation, this dissertation theorizes a causal pathway of corporate transparency lock-in centered on policy feedback mechanisms and strange coalitions. Past policy decisions mandating information collection by certain industries produce inter-industry divergence in their corporate transparency preferences. Civil society groups can then engage in policy entrepreneurship to integrate aligned industries into a new pro-transparency advocacy coalition. Increasing coalition size and organizational diversity intensifies political pressure on politicians and undermines opposition business lobbying, leading to the adoption of corporate transparency laws.I conduct a structured, focused comparison of policymaking around beneficial ownership transparency (BOT) laws in the United States, United Kingdom, Canada, and Australia as parallel demonstrations of this causal pathway, complemented by a quantitative analysis of interest group collaboration and influence through evaluating public consultation comments submitted in the US rulemaking process for its BOT law. I find support for corporate transparency lock-in, contrary to conventional wisdom that exogenous shocks like financial crises and pressure from international organizations cause the adoption of tax transparency and financial regulation. This dissertation highlights the distributional impacts of corporate transparency laws, provides further evidence of when business prefers stronger regulation, underscores the importance of political actors engaging in policy entrepreneurship activities to obtain policy change, and highlights the limits of business power over financial and economic regulation.
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