Publication: Understanding Firms' Environmental Performance: Does News Matter?
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Date
2008
ISSN
1432847X
Published
2008
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Abstract
The empirical literature on environmental performance or compliance has followed two strands: one based on the impact of formal regulation as a means of inducing better environmental performance, and the other centered on the role of informal regulation that mainly emphasizes the role of communities and capital markets. In this report, we analyze the impact of environmental news in print media on firms' environmental performance. Using data from a survey of industrial facilities in the Republic of Korea, multivariate probit estimation results indicate that the publication of a firm's negative environmental news in print media and the firm's awareness of this publication may be as important predictors of a firm's environmental performance as other sources of pressure. This article thus reemphasizes the potentially important role of the public release of environmental information in influencing firms' environmental performance.
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Publication Firms’ Environmental Performance : Does News Matter?(World Bank, Washington, DC, 2006-04)The empirical literature on environmental performance or compliance has followed two strands: one based on the impact of formal regulation as a means of inducing better environmental performance, and another centered on the role of informal regulation which mainly emphasizes the role of communities and capital markets. The authors analyze the impact of environmental news in print media on firms' environmental performance. Using data from a survey of industrial facilities in the Republic of Korea, probit estimation results indicate that the publication of environmental news in print media and the firm's awareness of this publication are important predictors of a firm's environmental performance, more so than environmental laws, regulations, and environmental training. This paper thus reemphasizes the key role of media in influencing firms' environmental performance.Publication Disclosure of Environmental Violations and the Stock Market in the Republic of Korea(World Bank, Washington, D.C., 2004-06)For 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.Publication Industrial Environmental Performance in China(World Bank, Washington, DC, 2000-02)Little empirical research has been done on monitoring and enforcement issues in environmental economics, especially to analyze the impact of monitoring and enforcement on polluters' environmental performance. No studies have been done in developing economies. The authors explore the impact of inspections, and the potential impact of pollution charges and citizens' complaints, on the environmental performance of polluters in China. Their analysis of plant-level data from the city of Zhenjiang shows that: 1) Inspections have a statistically significant impact on firms environmental performance. 2) Pollution charges do not have a statistically significant effect on firms performance - although the lack of variation in pollution charges in Zhenjiang precludes effectively capturing their impact. 3) Complaints have a significant impact on inspections and therefore on pollution control. Currently available data do not allow analysis of whether the cost of additional inspections is justified, but it is reasonable to speculate that additional inspections would improve social welfare in Zhenjiang, and that information and education campaigns are probably a good way to encourage citizen complaints.Publication Incomplete Enforcement of Pollution Regulation : Bargaining Power of Chinese Factories(World Bank, Washington, DC, 2002-01)Only a small number of studies have empirically examined the determinants of the monitoring and enforcement performed by environmental regulators, and most of these have focused on industrial countries. In contrast, the authors empirically examine the determinants of enforcement in China. More precisely, they analyze the determinants of firms' relative bargaining power with local environmental authorities with respect to the enforcement of pollution charges. The authors show that private sector firms appear to have less bargaining power than state-owned enterprises. Contrary to earlier findings, they also show that firms facing adverse financial situations have more bargaining power than other firms and are more likely to pay smaller pollution charges than they should be paying. Finally, the authors show that the greater the social impact of a firm's emissions (as measured by complaints), the less bargaining power it has with local environmental authorities.Publication Public Disclosure of Environmental Violations in the Republic of Korea(World Bank, Washington, DC, 2003-08)Since 1989, environmental authorities of the Republic of Korea have published on a monthly basis a list of enterprises violating the country's environmental rules and regulations. This may be the longest environmental public disclosure program currently in existence. Over the period 1993-2001 in excess of 7,000 violations have been recorded in these monthly violation lists, involving more than 3,400 different companies. In this paper, the authors provide a comprehensive descriptive analysis of this dataset. Results suggest that the news media have given an important, though perhaps declining coverage, to the violation lists, with a focus on publicly traded companies, failures to operate pollution abatement equipment, and prosecutions.
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