Veranstaltung
22
Okt 2018

14:15 - 15:45
IWH Research Seminar

Financial Constraints and Corporate Environmental Responsibility

This paper analyzes the effect of financial constraints on firms’ corporate social responsibility. Exploiting heterogeneity in firms’ exposure to a monetary policy shock in the U.S., which reduced financial constraints for some firms, I find that firms increase their environmental responsibility.

Speaker
Professor Martin Götz, PhD , Goethe-Universität Frankfurt am Main, House of Finance
Location
IWH-Konferenzsaal
Professor Martin Götz, PhD

Über den Autor

Professor Martin Götz, PhD

Research Interests: Financial Economics, Banking, Industrial Organization, Applied Microeconomics

This paper analyzes the effect of financial constraints on firms’ corporate social responsibility. Exploiting heterogeneity in firms’ exposure to a monetary policy shock in the U.S., which reduced financial constraints for some firms, I find that firms increase their environmental responsibility. I use facility-level data to account for unobservable timevarying influences on pollution and find that toxic emissions decrease when parent companies are more exposed to the monetary policy shock. I further find that these facilities are also more likely to implement pollution abatement activities. Examining within-parent company heterogeneity I find that pollution abatement investments center on facilities at greater risk of facing additional costs due to environmental regulation. The findings are consistent with the idea that a reduction in financial constraints reduces pollution as it allows firms to implement pollution abatement measures.

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