The impact of Environmental Protection Agency penalties on financial performance

The impact of Environmental Protection Agency penalties on financial performance

This study examines the impact of penalties assessed to publicly traded firms by the U.S. Environmental Protection Agency (EPA). Specifically, we look at whether there is an impact on earnings for firms that were fined by the EPA. There are two competing predictions regarding the impact of environme...

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Bibliographic Details
Published in:Business strategy and the environment Vol. 27; no. 8; pp. 1733 - 1740
Main Authors: Romero, Jorge A., Freedman, Martin, O'Connor, Neale G.
Format: Journal Article
Language:English
Published: Chichester Wiley Periodicals Inc 01-12-2018
Subjects:
Companies
Decision making
Earnings
environmental accounting
Environmental impact
Environmental management
environmental penalties
environmental performance
environmental policy
Environmental protection
Financial performance
Fines & penalties
green business
Penalties
Profits
Stockholders
sustainable development
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Summary:This study examines the impact of penalties assessed to publicly traded firms by the U.S. Environmental Protection Agency (EPA). Specifically, we look at whether there is an impact on earnings for firms that were fined by the EPA. There are two competing predictions regarding the impact of environmental penalties on earnings. Either there is no negative impact because firms allocate allowances for regulatory breaches or there is a negative impact because investors and stockholders have a preference to invest in efficient firms. This study contributes to the extant literature examining improvements in the business decision making related to corporate environmental management.
ISSN:0964-4733
1099-0836
DOI:10.1002/bse.2239