Firm-Level Financial Resources and Environmental Spills

65 Pages Posted: 24 Apr 2018

See all articles by Jonathan B. Cohn

Jonathan B. Cohn

University of Texas at Austin

Tatyana Deryugina

University of Illinois

Multiple version iconThere are 2 versions of this paper

Date Written: April 2018

Abstract

Using novel US environmental spill data, we document a robust negative relationship between the number of spills a firm experiences in a given year and its contemporaneous and lagged (but not future) cash flow. In addition, studying two natural experiments, we find an increase (decrease) in spills following negative (positive) shocks to a firm's financial resources, both in absolute terms and relative to control firms. Overall, our results suggest that firms' financial resources play an important role in their ability to mitigate environmental risk.

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Suggested Citation

Cohn, Jonathan B. and Deryugina, Tatyana, Firm-Level Financial Resources and Environmental Spills (April 2018). NBER Working Paper No. w24516. Available at SSRN: https://ssrn.com/abstract=3163297

Jonathan B. Cohn (Contact Author)

University of Texas at Austin ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-6827 (Phone)

Tatyana Deryugina

University of Illinois ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

HOME PAGE: http://deryugina.com

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