Toxic Emissions and Executive Departures
63 Pages Posted: 30 Jul 2018 Last revised: 22 Jun 2021
Date Written: December 10, 2019
Abstract
We evaluate the impact of the opening of toxic-emitting plants on executive departures from neighboring firms and the stock returns of those firms. We create a unique database on the career paths of executives at S&P 1500 firms and the opening of plants. Toxic-emitting plant openings increase executive departures from neighboring firms with adverse effects on stock prices. The results are larger when polluting plants and firms are geographically closer, executives spend more time at the treated firms, and executives have more general human capital. The results do not reflect other local factors or prior firm performance.
Keywords: Pollution costs, Spatial labor mobility, Executive turnover
JEL Classification: G3, Q51, Q52, Q53, J61, J63, R32
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