We show that firms reduce emissions by their plants in response to EPA enforcement actions against nearby plants of peer firms in the same industry. The emission reductions are larger for plants located close to socially responsible mutual funds (SRMFs) holding the firm’s shares, and for plants belonging to firms with high operational flexibility. The close proximity to SRMF is associated with adoption of more abatement measures. While the plants increase emissions again in the long run, these reversals are mitigated when a plant is located close to its SRMF. The results suggest that local SRMF monitoring complements EPA enforcement. Questions? Contact Professor Ali Akyol akyol@telfer.uottawa.ca
Prof. Sudipto Dasgupta is currently a Professor at the Department of Finance at The Chinese University of Hong Kong. He previously held academic positions at Lancaster University (where he was Distinguished Professor of Finance), The Hong Kong University of Science and Technology (where he was Department Head during 2013-2015; Chair Professor from 2008, and Professor from 2004), The Jawaharlal Nehru University, The Indian Statistical Institute, and The University of Southern California. He has been the Managing Editor of the International Review of Finance since 2008 and is a Senior Fellow of the Centre for Economic Policy Research (CEPR) and the Asian Bureau of Finance and Economics Research (ABFER). Prof. Dasgupta has also published extensively in top-tier finance journals.
Prof. Dasgupta’ has broad research interests with a focus on Corporate Finance. His more recent work includes papers based on empirical methodology and he has examined such issues as the capital structure policy of firms, the effect of financial constraints on firm behaviour, including inventory investment and the allocation of cash among alternative uses, the reputational effects of large customer accounts on the loan spreads of supplier firms, whether the managerial labor market rewards top executives for their perceived ability, and whether more intense product market competition increases firm efficiency by accelerating the replacement of less efficient managers.
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