The Impact of Supply Chain Transparency – Evidence from Conflict Minerals Disclosures

Supply chain transparency is increasingly imposed through public disclosure mandates, yet little is known about how such mandates change supplier relationships and financing within the supply chain. We study this question in the context of Section 1502 of the Dodd-Frank Act, which required affected firms to investigate their sourcing of conflict minerals and, in some cases, publicly identify upstream smelters and refiners. We develop a stylized model in which disclosure has two opposing effects: it can improve buyer information and intensify supplier competition, but it can also impose uneven compliance costs that shift business toward certified suppliers and weaken buyer outside options. To test these predictions, we combine Compustat data with hand-collected SEC Form SD filings and Responsible Minerals Initiative data. Using staggered variation in the timing of realized supplier disclosure among U.S. manufacturing Form SD filers, we find that firms experience a 4.3% to 5.7% decline in days payable outstanding after first disclosing upstream suppliers. We further show that, within disclosed supply chains, the share of conformant smelters rises over time, conformant smelters gain buyers faster than non-conformant smelters, and disclosed supplier networks expand on average. Overall, transparency mandates do not simply affect visibility; they reshape supplier competition, supplier composition, and buyer access to supplier-provided financing.