The Informational Value of Toxics Release Inventory Performance
Northeastern University - Accounting Area
Holly H. Johnston
affiliation not provided to SSRN
Lucia Silva Gao
University of Massachusetts at Boston
July 25, 2012
Sustainability, Accounting, Management & Policy Journal, Forthcoming
The study evaluates the informational value to investors of the Toxics Release Inventory (TRI) as an external outcome measure of corporate environmental performance. Emphasis is placed on the market response differences between three highly polluting industries. The results show evidence that market reaction to TRI emissions information varies by industry. Investors reward decreases in emissions in the electric utility industry, but increases are not penalized. In the chemical industry, increases in emissions are penalized, but decreases are not rewarded. Models do not capture any reaction to emissions changes in the pulp and paper industry. These results may be explained by the significant difference between industries in the U.S. percentage of total firm sales. The results do not appear to be driven by state regulatory stringency.
Keywords: Toxics Release Inventory, Environmental Performance
JEL Classification: M14, M41, Q28Accepted Paper Series
Date posted: July 25, 2012
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