Disclosure of environmental violations and the stock market in the Republic of Korea
AbstractFor almost 20 years, the Ministry of Environment of the Republic of Korea has published on a monthly basis a list of enterprises that fail to comply with national environmental laws and regulations. In this paper, the authors examine the reaction of investors to the publication of these lists and show that enterprises appearing on these lists have experienced a significant decline in their market valuation. Firms in developing countries are often said to have no incentives to invest in pollution control because they typically face weak monitoring and enforcement of environmental regulations. The findings of the authors, however, indicate that the inability of formal institutions to control pollution through fines and penalties may not be as serious an impediment to pollution control as is generally argued. Environmental regulators in developing countries could harness market forces by introducing structured programs to release firm-specific information about environmental performance.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3344.
Date of creation: 01 Jun 2004
Date of revision:
Pollution Management&Control; Health Economics&Finance; Environmental Economics&Policies; Water and Industry; Decentralization; Environmental Economics&Policies; Energy and Environment; Health Economics&Finance; Access to Markets; Markets and Market Access;
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-09-05 (Accounting & Auditing)
- NEP-AGR-2006-01-01 (Agricultural Economics)
- NEP-ALL-2006-01-01 (All new papers)
- NEP-CFN-2006-01-01 (Corporate Finance)
- NEP-ENE-2006-01-01 (Energy Economics)
- NEP-ENV-2006-01-01 (Environmental Economics)
- NEP-FIN-2006-01-01 (Finance)
- NEP-FMK-2006-01-01 (Financial Markets)
- NEP-SEA-2004-09-12 (South East Asia)
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