Disclosure of Environmental Violations and the Stock Market in the Republic of Korea
For almost 20 years, the Ministry of Environment of the Republic of Korea has published on a monthly basis a list of enterprises that fail to comply with national environmental laws and regulations. In this paper, the authors examine the reaction o...
| Main Authors: | , , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/06/4966653/disclosure-environmental-violations-stock-market-republic-korea http://hdl.handle.net/10986/14036 |
| Summary: | For almost 20 years, the Ministry of
Environment of the Republic of Korea has published on a
monthly basis a list of enterprises that fail to comply with
national environmental laws and regulations. In this paper,
the authors examine the reaction of investors to the
publication of these lists and show that enterprises
appearing on these lists have experienced a significant
decline in their market valuation. Firms in developing
countries are often said to have no incentives to invest in
pollution control because they typically face weak
monitoring and enforcement of environmental regulations. The
findings of the authors, however, indicate that the
inability of formal institutions to control pollution
through fines and penalties may not be as serious an
impediment to pollution control as is generally argued.
Environmental regulators in developing countries could
harness market forces by introducing structured programs to
release firm-specific information about environmental performance. |
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