Seminar April 15, 2013

Corporate Governance and the Environment: Evidence from Clean Patents

Abstract
We present causal evidence of corporate governance effects on firms’ environmental performance. Using changes in takeover legislation as exogenous variations in corporate governance quality, we show that worse-governed firms generate fewer green patents relative to all their innovations. This effect is greater for firms with a smaller share of institutional ownership, with a smaller stock of green patents, and operating in states with lower pollution abatement costs and in industries less dependent on energy inputs. Our results are consistent with “quiet life” interpretations whereby worse-governed managers avoid complex projects that would entail major changes in the firm’s status quo.

Time: Monday 15 April, 2013 from 01:00 to 02:00