Publications

1. Corporate Political Connections and Favorable Environmental Regulation
   Co worked with Amanda Heitz and Zigan Wang.
   Management Science, Forthcoming.

   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.

Working Papers

1. Mandatory Pollution Abatement, Financial Constraint and Firm Investment
   Co worked with Tri Vi Dang and Zigan Wang.

   This paper analyses the effect of mandatory pollution abatement on U.S. corporate investment and performance and shows that environmental regulation can stimulate investment in innovation. The following set of theoretical and empirical results are presented. For financially unconstrained firms, mandatory pollution abatement leads to more current R&D investment, more future investment in pollution abatement, reduces current profits, increases future profits and reduces the market value of the firm. However, if firms are financially constrained three of the five consequences are different. It leads to less current R&D investment, less future investment in pollution abatement and lower future profits.

2. The Power of the People: Labor Unions and Corporate Social Responsibility
   Co worked with Amanda Heitz and Zigan Wang.

   We examine the claim that unions provide societal benefits by directly examining the effect unionization has on corporate social responsibility (CSR). For the average sample firm, a one standard deviation increase in the unionization rate is associated with a decrease in environmental and social (E&S) CSR scores of between 2.4% to 15.3%. This overall decrease in E&S CSR is driven by reductions in categories that primarily benefit stakeholders outside the firm, though we find that unionization leads to an increase in E&S CSR categories that primarily benefit their members. These results are more pronounced when unions have relatively high bargaining power, such as when firms have a headquarters in non-right-to-work states, counties with low unemployment, or industries with low levels of competition. However, this negative effect attenuates for distressed firms and those located in communities that are more likely to value socially responsible policies. Empirically, our results are robust to a close election setting, allowing us to draw causal inference about the effect unions have on determining levels of CSR and ultimately impacting non-shareholding external stakeholders. Our study contributes to two separate strands of literature. First, we further the unionization literature by examining the impact unions have on outside stakeholders. Second, we contribute to the literature focusing on CSR. While the bulk of this literature analyzes the merits of CSR investment, scholars are still discovering its determinants.