Corporate Political Connections and Favorable Environmental Regulation

58 Pages Posted: 15 Nov 2019

See all articles by Amanda Heitz

Amanda Heitz

A.B. Freeman School of Business Tulane University

Youan Wang

The University of Hong Kong

Zigan Wang

The University of Hong Kong - School of Economics and Finance; Columbia University

Date Written: November 1, 2019

Abstract

We examine whether the Environmental Protection Agency (EPA) uniformly enforces the Clean Air Act for politically connected and unconnected firms using a close election setting. We find no difference in regulated pollutant emissions or EPA investigations between the two groups, though connected firms experience less regulatory enforcement and lower penalties. These results are more pronounced for firms connected to politicians capable of influencing regulatory bureaucrats and for connected firms that are more important to their supported politicians. Taken together, our results show that campaign contributions can indirectly benefit firms by way of reduced environmental regulatory enforcement and penalties.

Keywords: political connections, elections, regulation

JEL Classification: D72, D73, G18

Suggested Citation

Heitz, Amanda and WANG, Youan and Wang, Zigan, Corporate Political Connections and Favorable Environmental Regulation (November 1, 2019). Available at SSRN: https://ssrn.com/abstract=3479078 or http://dx.doi.org/10.2139/ssrn.3479078

Amanda Heitz

A.B. Freeman School of Business Tulane University ( email )

6823 Saint Charles Avenue
New Orleans, LA
United States

Youan WANG (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong
China
59353876 (Phone)

Zigan Wang

The University of Hong Kong - School of Economics and Finance ( email )

8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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