Absentee Ownership and Corporate Environmental Performance

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SES-0215366PI (s) Don Grant IIUniversity of Arizona The project addresses two questions concerning the environmental performance of absentee owned plants: (1) Do plants with out-of-state or foreign headquarters emit more toxins than locally owned plants?, and (2) Do plants with remote headquarters pollute more depending on the social capital of their host communities. Critics of globalization and capitalist expansion suggest that absentee owned plants have no long-term interest in local communities as places to live. Rather they are very willing to plunder their natural surroundings if it will maximize their parent firm's profits. Meanwhile literature on structural embeddedness suggest that this organizational model is too simplistic, that regardless of where a plant's headquarters is located, a plant's performance is conditioned by the local institutional culture in which it is situated. The research will test several hypothesis-(1) chemical plants with out-of-state or foreign headquarters have higher emission rates (i.e., release a larger percent of chemicals they use on-site to the environment), (2) chemical plants with out-of-state or foreign headquarters have higher emission rates when located in civically disengaged communities, and (3) chemical plants with out-of-state ore foreign headquarters have particularly high emission rates when located in communities that are both civically disengaged and comprised of poor minorities. To test these hypotheses, a data file consisting of roughly 2000 chemical plants will be used. The file includes information on each plant's toxic releases from the EPA's Toxics Release Inventory, its ownership status, and the social and institutional features of its surrounding community. A cross-section design will be used to determine the direct and conditional effects of absentee ownership on emission rates in 1990. To assess how these effects have changed a lagged panel design will be employed.Findings will provide new insights into what is rapidly becoming the modal type of business organization: absentee ownership. Prior research has demonstrated that absentee ownership has economic and social effects; this study will be the first to specify some of the conditions under which absentee ownership also has environmental consequences. Results could potentially guide regulators in deciding whether to monitor plants owned by foreign firms more closely, and the business community in its efforts at self-regulation.