This study shows an economically significant relation between a firm’s environmental performance and its cost of debt. Firms that have poor environmental performance will face future environmental liabilities related to compliance and clean-up costs due to increasingly strict environmental laws and regulations. Under current U.S. law, environmental liabilities can impair the value of fixed assets, as environmental claims often take precedence over the claims of creditors. Thus, future environmental liabilities are of particular concern to creditors. Previous accounting research has shown that a firm’s market value of equity is significantly affected by its environmental performance. However, the same has yet to be shown for a firm’s cost of debt capital. This study focuses on a sample of U.S. pulp and paper firms. The results imply that the market applies an ‘environmental risk’ premium of thirty-eight basis points to the cost of debt capital for the average public firm in the U.S. pulp and paper industry, based on its environmental performance. Environmental performance is measured using the annual toxic release inventory of the United States Environmental Protection Agency. It is a measure of the amount of toxic chemicals released to land, air and water by a firm’s operating facilities. This paper adds to the literature, providing evidence that environmental performance is a value relevant measure with regards to creditors. Thus, recent calls in the United States for greater cooperation between the Securities and Exchange Commission and the Environmental Protection Agency should be addressed. These calls are for the reporting, on a firm-wide basis, of quantifiable data that is already required by the Environmental Protection Agency but is not typically available in detail in firms’ reports to investors.

This study shows an economically significant relation between a firm’s environmental performance and its cost of debt. Firms that have poor environmental performance will face future environmental liabilities related to compliance and clean-up costs due to increasingly strict environmental laws and regulations. Under current U.S. law, environmental liabilities can impair the value of fixed assets, as environmental claims often take precedence over the claims of creditors. Thus, future environmental liabilities are of particular concern to creditors. Previous accounting research has shown that a firm’s market value of equity is significantly affected by its environmental performance. However, the same has yet to be shown for a firm’s cost of debt capital. This study focuses on a sample of U.S. pulp and paper firms. The results imply that the market applies an ‘environmental risk’ premium of thirty-eight basis points to the cost of debt capital for the average public firm in the U.S. pulp and paper industry, based on its environmental performance. Environmental performance is measured using the annual toxic release inventory of the United States Environmental Protection Agency. It is a measure of the amount of toxic chemicals released to land, air and water by a firm’s operating facilities. This paper adds to the literature, providing evidence that environmental performance is a value relevant measure with regards to creditors. Thus, recent calls in the United States for greater cooperation between the Securities and Exchange Commission and the Environmental Protection Agency should be addressed. These calls are for the reporting, on a firm-wide basis, of quantifiable data that is already required by the Environmental Protection Agency but is not typically available in detail in firms’ reports to investors.

Living in counties where manufacturers release environmental toxins, such as those tracked by the Environmental Protection Agency's (EPA) toxic release inventory (TRI), may elevate infants' health risks. Because infant mortality (IM) is a strong indicator of a population's health status, it is an important topic in public health research. The purpose of this research was to examine the potential relationships between IM, community size, and factors related to mothers' SES in counties where more than 25,000 pounds of annual toxic air releases occur. The dependent variable was IM per 1,000 live births in a given community for each of the 3 years included in this analysis (1987, 1995, and 2004). The independent variables included county size and factors related to mother's SES (education, age, ethnicity, and marital status). The theoretical framework consisted of Mosley and Chen's framework for exploring child survival. Archival, publicly available data were pulled from (a) the EPAs TRI data, and (b) linked birth and infant death files from the National Center for Health Statistics. The researcher followed a quantitative, retrospective cross-sectional design and conducted 3 linear regression models to test the research questions. Results indicated that an increase in community size was significantly associated with an increase in IM. Regarding the relationships between IM and the 4 different maternal characteristics (education, age, ethnicity, and marital status) included in the analysis, findings were mixed for the 3 years examined. Despite these unexpected findings, the overall results from this investigation, when considered alongside findings from previous research on IM, indicate that policy changes and interventions are needed to reduce socioeconomic disparities in IM, and to save the lives of more infants.

<p>This dissertation investigates the non-market value of environmental quality in several contexts with attention paid to equilibrium effects. Chapter One contributes to the ongoing debate concerning the effect of various actions taken by the U.S. Environmental Protection Agency under CERCLA, commonly known as the Superfund Program, on housing prices. The study differs from national sample analyses and site-specific analyses by providing policy-relevant estimates of the hedonic price function in a particular region for the average site. Further, an estimate of the effect on housing prices is given for each of the major events that occur under a typical Superfund remediation. Using house and time-varying census tract fixed effects, I find a 7.3% increase in sales price for houses within 3 km of a site that moves through the complete Superfund program. The analysis gives evidence of positive price appreciation for housing markets and serves as a lower bound for measuring remediation benefits. Chapter Two proposes a new dynamic general equilibrium model of residential location choice with social spillovers and uses it to evaluate the equilibrium consequences of changes in pollution exposure. In particular, I investigate the hypothesis of ``minority move-in,'' which postulates that disproportionate exposure to pollution results from minorities and low-income households trading off such exposure for lower housing costs. Second, I address the question of whether economic incentives caused by differences in willingness to pay across socioeconomic status can explain why polluters disproportionately locate near disadvantaged populations in order to minimize expenses from collective action bargaining over the negative externality. Simulations indicate ``minority move-in'' likely does account for some of the imbalance in exposure to pollution across socioeconomic status. Further, general equilibrium estimates reveal that equilibrium sorting behavior widens the gap in willingness to pay for environmental quality between minority and white households, and between high and low-income households. The disparity in general equilibrium willingness to pay to avoid toxic emissions provides economic incentives for polluters to target disadvantaged populations. Chapter Three investigates how information contained in the U.S. Environmental Protection Agency's Toxic Release Inventory program affects prices in the housing market. First, I use a reduction in the reporting requirement threshold in 2001 as a quasi-experiment to determine whether prices change for existing firms who, as a result of the change, must report. Second, the existence of a reporting threshold creates a discontinuity in treatment than can be exploited. I estimate a regression discontinuity model that assumes that site unobservables are balanced in a neighborhood of the discontinuity. Using a difference-in-differences estimator for the first specification, I find that listing a site in the Toxic Release Inventory lowers prices by 3.1% within a three kilometer radius of the site, and that the effect is stronger at shorter distances. The regression discontinuity model produces qualitatively similar results that are smaller in magnitude but still significant. The results suggest that households to capitalize the information contained in the Toxic Release Inventory. However, since the treatment sites under consideration have virtually no emissions, these results do not contradict previous findings in the literature that toxic air emissions are unrelated to prices. Rather, they suggest that households might be concerned about the dangers of toxic chemicals that might result from an emergency or catastrophic accident.</p> / Dissertation

This dissertation examines two main research questions: Why do firms deviate from their predicted level of toxic emissions, and how do these differences relate to financial performance? The objective is threefold: (1) to understand deviation in corporate environmental performance by looking at both industry and firm level variables, (2) to see how this deviation relates to both profitability and fluctuations in financial performance, and (3) to see if, and how, corporate environmental legitimacy affects the relationship between corporate environmental deviation and corporate financial performance. To achieve this objective the construct “corporate environmental performance deviation” is developed. It is defined as the extent to which a firm’s environmental performance deviates from its predicted performance, and is used to capture within-firm strategic choices in environmental management. Predicted environmental performance is calculated based on certain firm characteristics such as size and industry. Actual environmental performance is calculated using a weighted score of air emissions obtained from the Toxic Release Inventory (TRI) database. The difference between these two values represents a corporation’s environmental performance deviation. Corporate environmental performance deviation focuses on strategic choices related to environmental management, while recognizing that environmental management is the result of both institutional pressures and within-firm strategic decisions. Aligned with this focus, variables 2 related to this strategic choice are used to explain deviation in environmental management, including an environmental integration capability, firm strategy, and industry munificence and dynamism. Associated with the internal and external organizational analysis, institutional theory and the resource-based view (RBV) are used to explore the tension between deviation to increase competitiveness versus isomorphism to attain legitimacy. The sample is composed of 311 U.S. firms who have reported their toxic air releases to the TRI from 1998-2007. The sample is broken down into two subsets, those that exceed (positive deviation) or fail to meet (negative deviation) predicted environmental performance. Results of a longitudinal analysis show that positive environmental deviation is related to a greater capacity to strategically integrate environmental issues into a firm’s existing business approach, less munificence and dynamism in the task environment, and reduced financial fluctuations. Negative environmental deviation is decreased through a demonstrated capacity to strategically integrate environmental issues into a firm’s existing strategic approach, and related to greater munificence and dynamism in the task environment, reduced profitability and increased financial fluctuations. Lastly, although there are no significant main effects for corporate environmental legitimacy, the paradoxical combination of negative deviation and environmental legitimacy can reduce the severity of the negative financial results to negative deviation, both in terms of profitability and financial fluctuations.

This dissertation examines two main research questions: Why do firms deviate from their predicted level of toxic emissions, and how do these differences relate to financial performance? The objective is threefold: (1) to understand deviation in corporate environmental performance by looking at both industry and firm level variables, (2) to see how this deviation relates to both profitability and fluctuations in financial performance, and (3) to see if, and how, corporate environmental legitimacy affects the relationship between corporate environmental deviation and corporate financial performance. To achieve this objective the construct “corporate environmental performance deviation” is developed. It is defined as the extent to which a firm’s environmental performance deviates from its predicted performance, and is used to capture within-firm strategic choices in environmental management. Predicted environmental performance is calculated based on certain firm characteristics such as size and industry. Actual environmental performance is calculated using a weighted score of air emissions obtained from the Toxic Release Inventory (TRI) database. The difference between these two values represents a corporation’s environmental performance deviation. Corporate environmental performance deviation focuses on strategic choices related to environmental management, while recognizing that environmental management is the result of both institutional pressures and within-firm strategic decisions. Aligned with this focus, variables 2 related to this strategic choice are used to explain deviation in environmental management, including an environmental integration capability, firm strategy, and industry munificence and dynamism. Associated with the internal and external organizational analysis, institutional theory and the resource-based view (RBV) are used to explore the tension between deviation to increase competitiveness versus isomorphism to attain legitimacy. The sample is composed of 311 U.S. firms who have reported their toxic air releases to the TRI from 1998-2007. The sample is broken down into two subsets, those that exceed (positive deviation) or fail to meet (negative deviation) predicted environmental performance. Results of a longitudinal analysis show that positive environmental deviation is related to a greater capacity to strategically integrate environmental issues into a firm’s existing business approach, less munificence and dynamism in the task environment, and reduced financial fluctuations. Negative environmental deviation is decreased through a demonstrated capacity to strategically integrate environmental issues into a firm’s existing strategic approach, and related to greater munificence and dynamism in the task environment, reduced profitability and increased financial fluctuations. Lastly, although there are no significant main effects for corporate environmental legitimacy, the paradoxical combination of negative deviation and environmental legitimacy can reduce the severity of the negative financial results to negative deviation, both in terms of profitability and financial fluctuations.

Background and Purpose Low socioeconomic status (SES) populations as well as minorities are often exposed to a disproportionate number of hazardous chemical including hydrogen fluoride, benzene and formaldehyde (Bullard, 2008). The sources of these hazards may include noxious land uses such as incinerators and landfills, Superfund sites, Toxic Release Inventory (TRI) facilities, sewer and water treatment plants, and other locally unwanted land uses (Choi, Shim, Kaye, & Ryan, 2006). The disproportionate burden often results in increased exposure to harmful environmental conditions for affected communities (Wilson et al., 2014). The objectives of this study are to evaluate the relevance of demographic characteristics to (1) TRI facility location, (2) TRI chemical emissions, and (3) incidence and resolution of facility complaints. Methods The study area is the Atlanta Metropolitan Statistical Area (MSA), designated by the United States Office of Management and Budget is comprised of 20 counties. Multivariate logistic regression was used to assess the relative importance of race and socioeconomic variables in predicting whether a TRI facility was located in a census tract. We applied multiple regression models to examine the association between amount of air toxics released from TRI facilities in the census tract (dependent variable), the number of emissions from TRI facilities in the census tract and the amount of chemicals released per emission and socio-demographic variables at the census tract level. Additionally, multivariate ordinal logistic regression was used to evaluate the association between the number of complaints to toxic chemicals and time to resolution of complaints and the covariates (SES and race/ethnicity) at the census tract level. Results In multivariate models the odds ratio for the presence of a TRI facility is 0.89 (p=0.002) for each 1% increase of females with a college degree and 2.4 (p Discussion and Conclusion We found evidence of racial and socio-demographic disparities in the burden of TRI facilities and chemical emissions in the Atlanta MSA. We observed a trend for toxic chemicals emitted suggesting that more blacks and Hispanics were burdened by and potentially exposed to TRI facilities than were Whites. There was only one predictor, percentage of females with a college degree, where we observed an inverse and statistically significant association with the amount of chemical emissions in pounds. We also found evidence that of potential differences in regulation processes of TRI facilities. Overall, results indicate that race/ethnicity and socioeconomic composition play a role in TRI facility siting and TRI facility emissions indicating burden disparities for low-SES populations as well as non-Whites in the Atlanta MSA. These results are similar to results presented in the environmental justice literature.