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Empirical evidence on the viability of positive information to augment environmental regulation

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  • Wang, Yanbing
  • Delgado, Michael
  • Khanna, Neha
  • Bogan, Vicki

Abstract

We investigate the extent to which information regarding positive environmental activities undertaken by firms has the potential to influence environmental quality, and serve as a tool for regulation. In contrast to news of negative environmental performance, different types of positive environmental activities bear different signals to investors, which in turn implies that the ability of such information to augment regulation is not straightforward. We consider a range of positive environmental activities, and deploy a wide array of statistical tools to assess the impact of news regarding these activities to create financial incentives that may induce a firm to improve actual environmental quality. We find that the largest financial incentives regard self-made announcements of future activities, and bear the least credibility in terms of real environmental improvement. We consider the importance of related, potentially confounding events; differences between environmental disclosure and environmental performance; distributional impacts of public news; and endogeneity in news release. Our findings indicate positive environmental information is unlikely to augment environmental regulation.

Suggested Citation

  • Wang, Yanbing & Delgado, Michael & Khanna, Neha & Bogan, Vicki, 2015. "Empirical evidence on the viability of positive information to augment environmental regulation," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205675, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea15:205675
    DOI: 10.22004/ag.econ.205675
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    Keywords

    Environmental Economics and Policy; Research Methods/ Statistical Methods;

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