Does Private Equity Ownership Make Firms Cleaner? The Role Of Environmental Liability Risks

57 Pages Posted: 12 Jun 2020 Last revised: 17 Oct 2022

See all articles by Aymeric Bellon

Aymeric Bellon

UNC Kenan-Flagler Business School

Date Written: May 18, 2020

Abstract

This paper shows that private equity (PE) ownership reduces pollution when the target company faces high environmental enforcement or political risks. Conversely, PE-backed firms increase pollution when environmental liability risks are low, as shown by a novel natural experiment that reduced these risks for projects located on Native American land. Exploiting specific private equity deals within the energy industry, I find that PE governance mainly drove the results. Overall, maximizing shareholder value may benefit environmental outcomes when the potential liabilities of polluting are high

Keywords: Private equity, environmental externalities, Sustainable finance

Suggested Citation

Bellon, Aymeric, Does Private Equity Ownership Make Firms Cleaner? The Role Of Environmental Liability Risks (May 18, 2020). Available at SSRN: https://ssrn.com/abstract=3604360 or http://dx.doi.org/10.2139/ssrn.3604360

Aymeric Bellon (Contact Author)

UNC Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

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