Labor Mobility Restrictions and Corporate Carbon Performance

Abstract

This research the investigates the influence of U.S. state-level adoption of inevitable disclosure doctrine (hereafter IDD) on corporate GHG) emissions. Utilizing a sample of the S&P 500 firms from 1990 to 2023, our findings show a positive and significant influence of the adoption of the IDD on corporate GHG emissions. This shows that labor mobility restrictions limit knowledge spillovers, lowering firms' potential to learn and implement best practices in carbon reduction from competitors or new hires. Our findings are consistent with other GHG emission metrics, estimators, and a battery of endogeneity checks. Our extended analyses indicate that fiscal monitoring, and managerial ability negatively moderate the relationship between adoption of IDD and corporate GHG emissions, while financial constraints positively moderate this relationship. These findings could help investors, managers, and regulators make decisions on environment, climate change, the and corporate challenges.