Exporting Pollution: Where Do Multinational Firms Emit CO2?

Fisher College of Business Working Paper No. 2018-03-20

Charles A. Dice Working Paper No. 2018-20

53 Pages Posted: 22 Sep 2018 Last revised: 18 Mar 2020

See all articles by Itzhak Ben-David

Itzhak Ben-David

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance

Stefanie Kleimeier

Maastricht University - Department of Finance; Open Universiteit; Univ. of Stellenbosch Business School

Michael Viehs

Oxford University Smith School of Enterprise and the Environment; European Centre for Corporate Engagement (ECCE)

Multiple version iconThere are 2 versions of this paper

Date Written: March 16, 2020

Abstract

Despite awareness of the detrimental impact of CO2 pollution on the world climate, countries vary widely in how they design and enforce environmental laws. Using novel microdata about multinational firms’ CO2 emissions across countries, we document that firms headquartered in countries with strict environmental policies perform their polluting activities abroad in countries with relatively weaker policies. These effects are stronger for firms in pollution-intensive industries and firms with poor corporate governance characteristics. Although firms headquartered in countries with strict domestic environmental policies are more likely to export pollution to foreign countries, they nevertheless emit less overall CO2 globally. Our findings highlight the importance of collective action to combat climate change given the global scale of firms’ operations.

Keywords: Pollution, Production, Climate Change, CO2 Emission, Environmental Regulation

JEL Classification: F23, N50, O13, P18, Q56, R11

Suggested Citation

Ben-David, Itzhak and Jang, Yeejin and Kleimeier, Stefanie and Viehs, Michael, Exporting Pollution: Where Do Multinational Firms Emit CO2? (March 16, 2020). Fisher College of Business Working Paper No. 2018-03-20. Available at SSRN: https://ssrn.com/abstract=3252563 or http://dx.doi.org/10.2139/ssrn.3252563

Itzhak Ben-David (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Fisher 700D
Columbus, OH 43210-1144
United States
773 988 1353 (Phone)

HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/index.htm

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

Stefanie Kleimeier

Maastricht University - Department of Finance ( email )

Maastricht, 6200 MD
Netherlands

Open Universiteit

Valkenburgerweg 177
Heerlen, 6419 AT
Netherlands

Univ. of Stellenbosch Business School

Carl Cronjé Drive
CAPE TOWN, Cape Town 7535
South Africa

Michael Viehs

Oxford University Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44-1865-614938 (Phone)

European Centre for Corporate Engagement (ECCE) ( email )

Tongersestraat 53
Maastricht, 6211LM
Netherlands

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