Awarded by: Indian National Stock Exchange (NSE)
Congratulations to Assistant Professor Emilio BISETTI and PhD student ZHAO Xiao of the Department of Finance, who won the Indian National Stock Exchange (NSE) Best Paper Award with a cash prize of US$5,000. The winning research paper “Smokestacks and the Swamp” is co-authored with Finance Assistant Professor Stefan LEWELLEN from the Pennsylvania State University and Finance Assistant Professor Arkodipta SARKAR from the National University of Singapore.
The paper examines the causal effect of politicians’ partisan ideologies on the pollution control policy of firms. Comparing the US districts marginally won by Democrats and Republicans respectively, the researchers found that industrial plants increase pollution and invest less in abatement following close Republican wins.
Researchers also found evidence of reallocation: firms shift emissions away from areas represented by Democrats. However, costs rise and market values decline for firms whose representation becomes more Democratic, suggesting that politicians’ ideological demands can be privately costly. Pollution-related illnesses spike around the industrial plants in Republican districts, suggesting that firms’ pass through of politicians’ ideologies can have real consequences in local communities.
