Financial Constraints and Corporate Environmental Policies
By Qiping Xu, Taehyun Kim. The Review of financial studies, 2020
321 citations recorded by the source corpus.
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.
Subfields: Accounting, Economics and Econometrics, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/7fb51e2950cc7e10ddee7f483fa2d59a402a9351
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Citations in the corpus
- The Limits of Limited Liability: Evidence from Industrial Pollution (2020, background): “…papers study a variety of factors that affect corporate environmental behavior, including third-party auditors (Duflo et al., 4 2013)), reputational penalties (Karpoff et al., 2005), financial characteristics (Chang et al., 2016; Kim and Xu, 2018), and ownership structure (Shive and Forster, 2018).”
- Carbon risk and corporate capital structure (2020, unknown): “, Titman and Wessels (1988), Rajan and Zingales (1995), Korajczyk and Levy (2003), Bancel and Mittoo (2004), Lemmon, Roberts, and Zender (2008), Frank and Goyal (2009), Almazan et al.”