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Cercla And Deep Pockets: Market Response To The Superfund Program

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  • RICHARD K. HARPER
  • STEPHEN C. ADAMS

Abstract

This paper uses event study methods to estimate wealth effects upon shareholders who are named by the U.S. Environmental Protection Agency (EPA) as potentially responsible parties at a Superfund site. Impacts appear to be divided into three periods: an initial program period where stock market effects depend largely on prior visibility of the site, a second period where likely financial impact is more important, and a third period where notification has little association with either visibility or financial measures. However, the expected remediation cost burden is not borne evenly. “Deep‐pocket” firms appear to be disproportionately penalized by the market during the second period.

Suggested Citation

  • Richard K. Harper & Stephen C. Adams, 1996. "Cercla And Deep Pockets: Market Response To The Superfund Program," Contemporary Economic Policy, Western Economic Association International, vol. 14(1), pages 107-115, January.
    • Handle: RePEc:bla:coecpo:v:14:y:1996:i:1:p:107-115
    DOI: 10.1111/j.1465-7287.1996.tb00607.x
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    References listed on IDEAS

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    1. Tom H. Tietenberg, 1989. "Indivisible Toxic Torts: The Economics of Joint and Several Liability," Land Economics, University of Wisconsin Press, vol. 65(4), pages 305-319.
    2. Bruce Yandle, 1989. "Taxation, Political Action, and Superfund," Cato Journal, Cato Journal, Cato Institute, vol. 8(3), pages 751-764, Winter.
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    Cited by:

    1. Rajesh Kumar Bhaskaran & Irene Wei Kiong Ting & Sujit K. Sukumaran & Saraswathy Divakaran Sumod, 2020. "Environmental, social and governance initiatives and wealth creation for firms: An empirical examination," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 710-729, July.
    2. Christopher Knittel & Shulamit Kahn, 2002. "The Impact of the Clean Air Act Amendments of 1990 on Electric Utilitiesand Coal Mines: Evidence from the Stock Market," Working Papers 528, University of California, Davis, Department of Economics.
    3. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
    4. Alberini, Anna & Austin, David, 1999. "On and Off the Liability Bandwagon: Explaining State Adoptions of Strict Liability in Hazardous Waste Programs," Journal of Regulatory Economics, Springer, vol. 15(1), pages 41-63, January.
    5. Anna Alberini & John Bartholomew, 1999. "The Determinants Of Hazardous Waste Disposal Choice: An Empirical Analysis Of Halogenated Solvent Waste Shipments," Contemporary Economic Policy, Western Economic Association International, vol. 17(3), pages 309-320, July.
    6. Capelle-Blancard, Gunther & Laguna, Marie-Aude, 2010. "How does the stock market respond to chemical disasters?," Journal of Environmental Economics and Management, Elsevier, vol. 59(2), pages 192-205, March.
    7. repec:dau:papers:123456789/3187 is not listed on IDEAS
    8. Garber, Steven & Hammitt, James K., 1998. "Risk Premiums for Environmental Liability: Does Superfund Increase the Cost of Capital?," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 267-294, November.
    9. Karpoff, Jonathan M & Lott, John R, Jr & Wehrly, Eric W, 2005. "The Reputational Penalties for Environmental Violations: Empirical Evidence," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 653-675, October.
    10. Muehlenbachs, Lucija & Newcomb Sinha, Elisabeth & Ranjan Sinha, Nitish, 2011. "Strategic Release of News at the EPA," RFF Working Paper Series dp-11-45, Resources for the Future.
    11. Anna Alberini & Shelby Frost, 2007. "Forcing Firms to Think About the Future: Economic Incentives and the Fate of Hazardous Waste," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(4), pages 451-474, April.
    12. Carpentier, Cécile & Suret, Jean-Marc, 2015. "Stock market and deterrence effect: A mid-run analysis of major environmental and non-environmental accidents," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 1-18.

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