RT Journal Article
SR Electronic
T1 Environmental Information Provision, Market Valuation, and Firm Incentives: An Empirical Study of the Japanese PRTR System
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 382
OP 393
DO 10.3368/le.86.2.382
VO 86
IS 2
A1 Hibiki, Akira
A1 Managi, Shunsuke
YR 2010
UL http://le.uwpress.org/content/86/2/382.abstract
AB The environmental performance of a listed firm could affect its level of investment in pollution prevention and its access to financial markets. Previous studies using Tobin’s q that explore market response to environmental performance do not distinguish between the impact of performance on investment and market response, which may mislead conclusions. To overcome this problem, we simultaneously estimate the functions of the intangible asset, the replacement cost, and the toxic chemical risk. We find that the Japanese financial market does not value risk associated with toxic chemical releases. Nevertheless, even without market valuation, firms increase investment to reduce pollution. (JEL D21, Q58)