Environmental Liabilities, Creditors, and Corporate Pollution: Evidence from the Apex Oil Ruling / Jianqiang Chen, Pei-Fang Hsieh, Po-Hsuan Hsu, Ross Levine.

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Chen, Jianqiang

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w29740.Publication details: Cambridge, Mass. National Bureau of Economic Research 2022.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We evaluate the impact of the 2008 Apex Oil court decision that made the creditors of some corporations financially liable for the environmental damages caused by specific pollutants. Apex reduced the circumstances under which environmental liabilities were dischargeable in Chapter 11, which generated financial incentives for the creditors of firms near bankruptcy to pressure their firms to reduce emissions of those pollutants. We discover that Apex lowered bond prices, widened loan spreads, and reduced corporate pollution among firms that (a) release the specific chemicals covered by Apex and (b) are close to Chapter 11 and hence likely to be affected by changes to the dischargeability of environmental liabilities. Further tests suggest that creditors rapidly responded to Apex and successfully induced firms to reduce pollution.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w29740 (Browse shelf(Opens below))	Not For Loan

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February 2022.

We evaluate the impact of the 2008 Apex Oil court decision that made the creditors of some corporations financially liable for the environmental damages caused by specific pollutants. Apex reduced the circumstances under which environmental liabilities were dischargeable in Chapter 11, which generated financial incentives for the creditors of firms near bankruptcy to pressure their firms to reduce emissions of those pollutants. We discover that Apex lowered bond prices, widened loan spreads, and reduced corporate pollution among firms that (a) release the specific chemicals covered by Apex and (b) are close to Chapter 11 and hence likely to be affected by changes to the dischargeability of environmental liabilities. Further tests suggest that creditors rapidly responded to Apex and successfully induced firms to reduce pollution.