Joining Forces: The Spillover Effects of EPA Enforcement Actions and the Role of Socially Responsible Investors

Sudipto Dasgupta, Thanh Huynh and Ying Xia

No 16584, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show that firms reduce emissions at their local plants following EPA enforcement actions against nearby plants of peer firms operating in the same product market. The emission reductions are larger for plants located close to socially responsible mutual funds (SRMFs) that hold the parent firm’s shares, and for plants belonging to firms with high operational flexibility. The close proximity to SRMFs is also associated with adoption of more abatement measures. While plants increase emissions again in the long run, these reversals are prevented for plants located close to SRMFs. We provide evidence that the threat of exit by SRMFs has real consequences for how the local plants respond to the enforcement action The results suggest that local SRMF monitoring complements EPA enforcement.

Keywords: Socially responsible mutual funds; Epa enforcement; Spillover effects; Toxic emissions (search for similar items in EconPapers)
JEL-codes: G23 G31 G38 K32 Q50 (search for similar items in EconPapers)
Date: 2021-09
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP16584 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:16584

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP16584

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().