Finance Seminar（2019-12)

Topic: Political Connections and Selective EPA Enforcement

Speaker: Zigan Wang, The University of Hong Kong

Time: Wednesday, 24 April, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract:

We examine whether the Environmental Protection Agency (EPA) uniformly enforces regulation pertaining to the Clean Air Act (CAA) for politically connected and unconnected firms using a close election setting from 1980-2010. We find no difference in total greenhouse gas emissions or EPA investigations between the two groups. However, politically connected firms are less likely to be involved in EPA enforcement actions, and when prosecuted, they receive smaller penalties, indicating that they benefit from select environmental enforcement. These results are more pronounced for firms connected to politicians capable of influencing regulatory bureaucrats and connected firms that are more important to their supported politicians. Taken together, our results show that campaign contributions can indirectly benefit firms by way of reduced environmental regulatory enforcement and fines.

Introduction:

Dr. Zigan WANG received his Ph.D. from Columbia University and joined The University of Hong Kong as Assistant Professor of Finance in 2015. He finished his undergraduate study at Tsinghua University, Beijing in 2009. Dr. Wang had publications on real estate, banking and quantitative trading strategies and his research on foreign exchange was published in the Journal of International Economics. He is currently interested in the legal impact of regulation and policies on firm behaviors.

//www.fbe.hku.hk/staff/academic/detail/zigan-wang

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