The Market Response to Mandatory Conflict Mineral Disclosures

  • Fayez A. ElayanEmail author
  • Kareen Brown
  • Jennifer Li
  • Yijia Chen
Original Paper


This paper examines the market response to the events leading up to the passage of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) to explore whether investors value mandatory human rights disclosures of conflict mineral usage. Using a sample of 3639 US registrants from January 1, 2008 to September 30, 2014, we document a significant negative stock market reaction to the passage of the Act. Using a sample of 1206 filers, we also find a negative market reaction to conflict mineral disclosures under the Act. The market reaction is more negative and limited to companies that source their minerals from the DRC and adjoining countries, companies with prior records of human rights violations, and companies with ambiguous disclosures. However, the market appears to reward firms that use risk-mitigation strategies. This paper provides preliminary evidence that the mandatory disclosure of conflict mineral information on Form SD poses a threat to firms’ legitimacy, resulting in a net cost to investors. The results of this study provide economic justification for companies with poor records of conflict mineral sourcing to improve their practices for the purpose of avoiding the high costs that will arise if they are forced to disclose human rights abuses related to conflict mineral use.


Human rights Dodd-Frank Act Corporate disclosure Conflict minerals Corporate social responsibility 



We gratefully acknowledge the financial support provided by Brock University. We also thank Nadia Bernaz, Joshua Cutler (Discussant), Jonathan Drimmer, Paul Griffin, Michelle Hanlon (Editor), Nien-he Hsieh, David Lont, Markus Milne, Khalid Nainar, Gordon Richardson, Mark Taylor, Narongsak (Tek) Thongpapanl, Samir Trabelsi, Matthew Wegener, Glen Whelan, an anonymous reviewer and the participants of the 2015 ASAC annual meeting, the 2014 Ontario Universities Accounting Symposium, the 2016 American Accounting Association annual meeting and the 2016 Canadian Academic Accounting Association annual meeting for their insightful comments.


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Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.Goodman School of BusinessBrock UniversitySt. CatharinesCanada

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