The effect of shale gas booms on environmental CSR activity

Using shale gas developments that are staggered across counties and time, we examine whether uncertain environmental risks affect firms' environmental CSR (corporate social responsibility). We find that firms headquartered in shale gas boom counties significantly increase environmental CSR compared with firms located in nonboom counties. Furthermore, we demonstrate that the impacts of shale gas booms on environmental CSR are more pronounced when firms' litigation risk is higher, when firms have more stakeholder interactions, and when firms' orientation is more long-term. Additionally, the increased environmental CSR driven by the shale boom is associated with subsequent firm value. Furthermore, evidence demonstrates that firms trade off the benefits and potential legal liability of internalizing physical environmental risk in environmental CSR decisions.