Independent, private firms pollute less than public firms, study shows | News | Notre Dame News | University of Notre Dame Skip To Content Skip To Navigation Skip To Search University of Notre Dame Notre Dame News Experts ND in the News Subscribe About Us Home Contact Search Menu Home › News › Independent, private firms pollute less than public firms, study shows Independent, private firms pollute less than public firms, study shows Published: July 22, 2019 Author: Shannon Roddel Pollution Private, independent firms are less likely to pollute and incur EPA penalties than public and private equity-owned firms, according to new research from the University of Notre Dame. Sophie Shive “Corporate governance and pollution externalities of public and private firms” is forthcoming in the Review of Financial Studies from Sophie Shive and Margaret Forster, finance professors in Notre Dame’s Mendoza College of Business. They found that private, independent firms have lower carbon emissions from their operations, controlling for their size and output, than public and private equity-owned firms. “This is a very tough question to answer in a general sample of firms,” Shive says, “because one has to identify a ‘normal’ level of emissions, given an imperfect industry categorization and coarse measures of size, etc. For this reason, we also do a deeper dive into electric utilities, which are some of the largest emitters, and find that even controlling for things like generator age, independent privately-owned utilities (generally cooperatives or other unconventional corporate structures) emit less carbon dioxide per unit of electricity generated.”  The study offers preliminary research into how finance can help mitigate climate change and sheds light on the debate about which type of corporate structure is better for reducing the “tragedy of the commons.” This occurs when each entity consumes or spoils too much of a public good and harms society, rather than coordinating to use the resource wisely. “The classic example is individual farmers who each have the incentive to let their cows eat as much grass as possible in a public field,” Shive explains. “But this behavior overwhelms the grass and hurts everyone.”  Margaret Forster The study finds no differences between private, sponsor-backed firms and public firms, controlling for industry, time, location and a host of firm characteristics. Within public firms, it identified a negative association between emissions and mutual fund ownership and board size, suggesting that increased oversight may decrease pollution. The researchers used comprehensive data on greenhouse gas emissions from 2007 to 2016, combined with EPA data. They used workhorse statistical methods to control for other potential drivers of carbon emissions.  “This should help inform the debate about whether and how business can take a leadership role in resolving these types of global problems,” Shive says, “since governments often have trouble coordinating on global issues.” Shive’s research has been cited in national news outlets, including the Wall Street Journal. She has taught Introductory Finance, Investment Theory and Private Equity. A former economist at the International Monetary Fund, faculty at Ohio State University, and principal at Wanger Asset Management LLP, Forster teaches courses in investments, international finance and financial institutions. Contact: Sophie Shive, 574-631-1477, sshive1@nd.edu Posted In: Research Home Experts ND in the News Subscribe About Us Related October 05, 2022 Astrophysicists find evidence for the presence of the first stars October 04, 2022 NIH awards $4 million grant to psychologists researching suicide prevention September 29, 2022 Notre Dame, Ukrainian Catholic University launch three new research grants September 27, 2022 Notre Dame, Trinity College Dublin engineers join to advance novel treatment for cystic fibrosis September 22, 2022 Climate-prepared countries are losing ground, latest ND-GAIN index shows For the Media Contact Office of Public Affairs and Communications Notre Dame News 500 Grace Hall Notre Dame, IN 46556 USA Facebook Twitter Instagram YouTube Pinterest © 2022 University of Notre Dame Search Mobile App News Events Visit Accessibility Facebook Twitter Instagram YouTube LinkedIn