In the Shadow of Sunshine Regulation : Considering Disclosure Biases

Performance reporting in sunshine regulation is subject to disclosure biases, because agents may game the regulation or encounter di culties in complying. These biases limit the appraisal of the impact of sunshine regulation on performance. We investigate the behavioral causes of such disclosure biases by focusing on transaction costs economizing and opportunism. We provide an original methodology to take into account information asymmetries in principal-agent relationships. We focus on water utilities management in France. Our dataset includes 795 observations covering water utilities and performance indicators characteristics. It allows for comparisons of revealed and observed performance and identi es di erent types of disclosure biases. Findings indicate that opportunism is a signi cant motivation for disclosure biases while, unexpectedly, transaction costs are not a direct trigger of disclosure biases