2021/05/03 by Qiping Xu, Tae-Hyun Kim · 4 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Corporate Social Responsibility Reporting #Energy, Environment, Economic Growth #Housing Market and Economics
paper · doi:10.1093/rfs/hhab056
openalex publication_date 2021/05/03 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
Abstract This paper documents evidence that financial constraints increase firms’ toxic emissions given that firms actively trade off abatement costs against potential legal liabilities. Exploring three quasi-natural experiments in which firms’ financial resources are likely exogenously affected, we find that relaxing financial constraints reduces U.S. public firms’ toxic releases. The effects of financial constraints on toxic releases are amplified when regulatory enforcement and external monitoring weaken. Overall, our evidence highlights the real effects of financial constraints in the form of environmental pollution, which is a costly negative externality imposed on society and public health.