Financial Constraints and Corporate Environmental Policies

• 成果类型: Article
• 署名作者: Xu, Qiping; Kim, Taehyun
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; Chung Ang University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhab056
• 发表日期: 2022
• 页码: 576
• 关键词: clean-air act; SOCIAL-RESPONSIBILITY; pollution; IMPACT; prices; COSTS; performance; INVESTMENT; TRADE; text

摘要

This paper documents evidence that financial constraints increase firms' toxic emissions given that firms actively trade off abatement costs against potential legal liabilities. Exploring three quasi-natural experiments in which firms' financial resources are likely exogenously affected, we find that relaxing financial constraints reduces U.S. public firms' toxic releases. The effects of financial constraints on toxic releases are amplified when regulatory enforcement and external monitoring weaken. Overall, our evidence highlights the real effects of financial constraints in the form of environmental pollution, which is a costly negative externality imposed on society and public health.