Financing conditions and toxic emissions

Martin Goetz

No 254, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: Exploiting heterogeneity in U.S. firms' exposure to an unconventional monetary policy shock that reduced debt financing costs, I identify the impact of financing conditions on firms' toxic emissions. I find robust evidence that lower financing costs reduce toxic emissions and boost investments in emission reduction activities, especially capital-intensive pollution control activities. The effect is stronger for firms in noncompliance with environmental regulation. Examining the ability of regaining regulatory compliance by implementing pollution control activities I find that only capital-intensive activities help firms regaining compliance. These findings underscore the impact of firms' financing conditions for emissions and the environment.

Keywords: Toxic emissions; Financing conditions; Bond markets; Unconventional Monetary Policy (search for similar items in EconPapers)
JEL-codes: E52 G32 Q52 Q53 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-env and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:254

DOI: 10.2139/ssrn.3411137

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