Corporate transparency is often assumed to be driven by law, regulation, and public scrutiny. Yet new research shows that private pressure – quiet, anonymous inquiries sent through companies’ grievance channels – can meaningfully shape how firms disclose sensitive information.

In a recent paper, we explore whether grievance mechanisms, a relatively obscure requirement in corporate due diligence frameworks, can serve as effective accountability tools. Our setting is conflict minerals disclosures, one of the most prominent corporate transparency mandates of the past decade.

Section 1502 of the Dodd-Frank Act requires SEC registrants to disclose whether their products contain “conflict minerals” (tin, tantalum, tungsten, and gold) sourced from the Democratic Republic of Congo or adjoining countries. The goal is to cut off funding to armed groups fueling violence in the region by increasing supply chain transparency.

Compliance, however, has been weak. Many firms treat conflict minerals reporting as a box-checking exercise, with limited regulatory enforcement. Meanwhile, NGOs and scholars have documented the persistence of illicit mineral trade networks that continue to sustain armed groups.

A recent U.S. Treasury action offered a unique opportunity to test whether private stakeholder interventions could make a difference. In March 2022, the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions against African Gold Refinery (AGR), based in Uganda, for trafficking Congolese gold and financing armed groups. Despite the sanctions, dozens of U.S. firms continued to list AGR as a smelter or refiner in their SEC conflict minerals reports.

This raised a key question: If quietly alerted to AGR’s sanctioned status, would firms remove or explain the entity in their conflict minerals disclosures?

We designed a randomized field experiment involving 234 firms that listed AGR in their 2022 conflict minerals reports. Using grievance hotlines and reporting channels identified in companies’ codes of conduct or filings, we sent anonymous inquiries to two-thirds of these firms.

The inquiries highlighted OFAC’s punishment of AGR and asked three straightforward questions: (1) Did the firm have an exemption to continue using AGR as a source? (2) Were there any undisclosed updates to its reporting? (3) What actions had the firm taken in response?

To half of the treatment group, we added an illustrative disclosure excerpt – Tesla’s acknowledgment of AGR in its own report – to test whether this example would nudge firms to acknowledge AGR in their own reports. The remaining third of the sample received no inquiry and served as a control group.

Because we sent our inquiries seven weeks before the SEC’s 2023 filing deadline, firms had time to revise their disclosures but not to overhaul their supply chains. This design allowed us to measure disclosure changes directly attributable to private pressure.

The results were striking.

• High engagement: 80 percent of firms that received our inquiries responded, often with detailed answers or by launching internal investigations. Most replies came within 15 days. Only a handful discouraged anonymous reporting.
• Changes in disclosure: Firms that received inquiries were significantly more likely than controls to alter their subsequent SEC filings. Some removed AGR entirely from their lists of suppliers; others added explanatory notes acknowledging AGR’s sanctioned status. The pattern depended on the treatment: Firms shown a disclosure example tended to keep AGR but explain its presence, while firms that didn’t receive an example were more likely to remove AGR.
• Market reactions: Investors rewarded these changes. Firms that removed or explained AGR saw stock market gains of 2 to 3 percent in the days following their filings – equivalent to roughly $91 million to $136 million for the median firm. This suggests that markets value proactive steps to address regulatory and reputational risks, even when those steps are limited to disclosure.

Our findings demonstrate that any private citizen can send inquiries through grievance mechanisms to drive a change in corporate behavior.

This has several implications:

1. Grievance mechanisms work. Often dismissed as window-dressing, these hotlines and reporting systems proved to be effective ways for outsiders to prompt real corporate responses.
2. Disclosure is malleable. Firms adjusted their conflict minerals filings in just weeks, suggesting that reporting practices can be influenced more easily than underlying supply chain practices. This underscores the importance of monitoring the form as well as the substance of corporate transparency.
3. Markets respond. The positive investor reaction shows that disclosures about supply chain risks are not mere compliance exercises. They send important signals about firms’ governance and risk management.
4. Policy design. Regulators face resource constraints and enforcement gaps. Our evidence suggests that grievance mechanisms, if strengthened and widely used, could complement formal oversight by leveraging stakeholder scrutiny. They may represent a scalable, low-cost accountability tool in other regulatory contexts as well.

Of course, disclosure is not the same as real change. Our study cannot determine whether firms that revised their reports also altered their sourcing practices. And because we focused on one sanctioned entity, AGR, our findings may not apply generally.

Still, the evidence suggests that transparency, grievance mechanisms, and engaged stakeholders can play a larger role in shaping corporate behavior than previously recognized. Future research might examine whether private inquiries can drive not just disclosure adjustments, but also substantive shifts in supply chain relationships.

Corporate accountability is often imagined as the product of public enforcement and public pressure. Yet our study shows that quiet, private interventions can also move the needle. When stakeholders use grievance mechanisms to raise concerns, firms listen – and investors take notice.

For policymakers, the lesson is clear: Grievance mechanisms should not be treated as symbolic. Properly designed, they can serve as meaningful complements to regulatory mandates and market discipline, helping bridge the gap between the ideals of transparency and the realities of global supply chains.

This post comes to us from Mary Adenle at the University of Texas at Austin’s McCombs School of Business, Fred Asante at Cornell University, Tendai Masaya, at Pennsylvania State University’s Smeal College of Business, and David Park at The Chinese University of Hong Kong, Shenzhen’s School of Management and Economics. It is based on their recent paper, “The Effect of Private Pressure on Corporate Disclosures: Evidence from a Randomized Field Experiment,” available here.