Environmental Externalities of Hedge Fund Activism

Abstract: We study the effect of hedge fund activism on corporate environmental behaviors. Using plant-chemical level data from the EPA, we find that activism campaigns are as- sociated with

a 17 percent drop in emissions for chemicals at plants of targeted firms. Campaigns are associated with changes across a wide range of chemicals, including those emitted into the air, water, and

ground and those that are harmful to humans. Evidence suggests this change in environmental behavior stems from a drop in produc- tion rather than an increase in abatement activities. The net

effect on environmental efficiency is positive, with emissions falling by 8 percent per unit of output. Overall, our findings highlight the idea that the benefits of activism are not necessarily

confined to shareholders, but may also extend to other stakeholders (e.g., the local community) affected by firms’ emissions.

Link to the seminar:
https://eur-nl.zoom.us/j/92553575048?pwd=NDh5ZkJzMmtEOURqSlB1dzFmZC9Idz09

Meeting ID: 925 5357 5048

For the passcode, please send an email to: stolting@ese.eur.nl