THESIS
2021
1 online resource (ix, 66 pages, 41 pages) : illustrations (some color)
Abstract
Essay I: The Real Effect of Local Media on Corporate Social Responsibility (CSR):
Evidence from Toxic Emissions
This paper explores the role of local media in disciplining firm managers’ environmental
practices, a core part of CSR engagements. By exploiting staggered shocks to local media coverage
due to the closure of local daily newspapers, I find that firm plants located in areas with reduced
local media coverage significantly increase toxic emissions, which are associated with financial
benefits such as reduced production costs. The effect is stronger when the reduction in local media
coverage is more severe, when firm plants directly sell goods to end consumers or mainly serve
local customers, and when firm managers exhibit greater short-termism. This effect is weaker when
other p...[
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Essay I: The Real Effect of Local Media on Corporate Social Responsibility (CSR):
Evidence from Toxic Emissions
This paper explores the role of local media in disciplining firm managers’ environmental
practices, a core part of CSR engagements. By exploiting staggered shocks to local media coverage
due to the closure of local daily newspapers, I find that firm plants located in areas with reduced
local media coverage significantly increase toxic emissions, which are associated with financial
benefits such as reduced production costs. The effect is stronger when the reduction in local media
coverage is more severe, when firm plants directly sell goods to end consumers or mainly serve
local customers, and when firm managers exhibit greater short-termism. This effect is weaker when
other pro-environmental activists monitor firm plants. Collectively the findings suggest that local
media monitoring plays an important role in forcing firms to be environmentally responsible, partly
by raising customers’ environmental awareness and by restricting managerial myopia.
Essay II: The Whack-A-Mole Game: The impact of Say on Pay Laws on Insider Trading
Profitability
This paper examines whether mandatory adoption of say on pay increases executives’
incentives to engage in insider trading as a way to offset the regulatory-induced increase in
compensation risk. My empirical design exploits the staggered adoption of say on pay laws across
countries over the 2002-2015 period. I find that the adoption of say on pay laws is associated with
a material increase in insider trading profitability. Cross-sectional tests suggest that the increase is
higher in firms where executive pay is most affected by say on pay (e.g. firms with excess pay and
weaker governance) and countries with weaker insider trading restrictions. Finally, I find that
executives increase their trades’ profitability by engaging in larger, more frequent and more
informative trades (in terms of future returns) - including more trades during information-sensitive
periods.
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