While project area A examines how transparency is being established, project area B focuses on the internal and external effects of transparency. Effects of transparency can result from multiple mechanisms that are crucial to identify and understand. While external effects of firm transparency in capital markets have been studied extensively, within-firm consequences of transparency or effects on product and labor markets have been somewhat neglected by prior literature. For example, we know very little about whether transparency affects the market position of a firm in the labor market or how firm- and industry-level transparency is linked to product market competition. Moreover, even research on capital market effects of transparency is mostly limited to public firms and relies on readily available archival data.
Project area B is designed to address these shortcomings. It does so by:
- using insights from project area A by incorporating the identified determinants of information flows and transparency as observable covariates.
- identifying context-dependent mechanisms that give rise to intended and unintended effects of transparency.
- testing the theoretical predictions along these predicted mechanisms by exploiting settings that allow for causal inference.