An Empirical Analysis of Where Firms Choose to Emit and Corresponding Firm Performance

This paper explores the firm-level, state and federal characteristics that explain pollution emissions during 1988-1996. Differences in pollution approach between different types of firms and the states in which they operate provide an unique research setting to investigate how firms respond to differing levels of state environmental regulation, what effect a change in regime at the federal level has on firm pollution control, how firms with favorable environmental reputations compare to firms with unfavorable environmental reputations and what firm characteristics are related to environmental performance. The results indicate that government regulation influences where firms choose to emit. The results further indicate the firms that emit more of their emissions in pro-industry states have organizational slack available to meet the increase in federal environmental regulations. Moreover, firms with favorable environmental reputations did not reduce emissions significantly more than firms with unfavorable environmental reputations