Do strong incentives to cut costs lead firms to neglect negative externalities? We find that costcutting incentives can be environmentally friendly. To arrive at this conclusion, we examine uniquely detailed plant-level data of private and public firms in the most polluting industry in the US - electric utilities.
To establish causality, we exploit the staggered passage of restructuring legislation, which opened the market to competition and incentivized utilities to cut costs. Following the restructuring, plants moved to cheaper but less polluting production processes. In addition, competition forces have improved allocation of operation across competing plants, contributing further to pollution reduction.
Using natural language processing, we identify and categorize the corporate goals in the shareholder letters of the 150 largest companies in the United...
In this paper, I analyse the main trade-offs between the economic value of the firm and its social value exploring how they are solved through corporate...