How do firms' efforts to prevent harm to third parties change as they approach, enter, and then exit bankruptcy? To help answer this, I investigate a panel of roughly 350 US firms, all of which declare bankruptcy and are regulated under the Clean Water Act (CWA) for pollutants they release into...

In 2009, the Seventh Circuit ruled in U.S. v. Apex Oil that certain types of injunctions requiring firms to clean up previously released toxic chemicals were not dischargeable in bankruptcy. This was widely perceived to represent a split with Sixth Circuit precedent, although Supreme Court cert...

Limited liability has long been recognized to incentivize owners of firms near bankruptcy to take suboptimal care to prevent harm to third parties. I use violations of the Clean Water Act to study these incentives. I show that as firms approach bankruptcy (as measured by their credit ratings)...