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Corporate Governance and Pollution Externalities of Public and Private Firms

Author

Listed:
  • Sophie A Shive
  • Margaret M Forster
  • Jose Scheinkman

Abstract

The number of U.S. publicly traded firms has halved in 20 years. How will this shift in ownership structure affect the economy’s externalities? Using comprehensive data on greenhouse gas emissions from 2007 to 2016, we find that independent private firms are less likely to pollute and incur EPA penalties than are public firms, and we find no differences between private sponsor-backed firms and public firms, controlling for industry, time, location, and a host of firm characteristics. Within public firms, we find a negative association between emissions and mutual fund ownership and board size, suggesting that increased oversight may decrease externalities.

Suggested Citation

  • Sophie A Shive & Margaret M Forster & Jose Scheinkman, 2020. "Corporate Governance and Pollution Externalities of Public and Private Firms," The Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1296-1330.
    • Handle: RePEc:oup:rfinst:v:33:y:2020:i:3:p:1296-1330.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhz079
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    More about this item

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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