Grow and Pollute but Invest and Clean: Dynamic Associations between Parent Firm Characteristics and Facility Toxic Releases

Abstract

This paper examines how relationships between parent-firm characteristics and facility-level toxic releases evolve over time. Using 238,304 observations for 7,447 U.S. manufacturing facilities from 1992 to 2023, we link on-site releases from the Toxics Release Inventory to financial, managerial, and macroeconomic data. A time-varying mean-group estimator accommodates changes in average coefficients over time and heterogeneity across facilities. The main result is a persistent contrast between operating scale and investment-related adjustment: sales is positively associated with release growth, whereas investment intensity is negatively associated. This pattern remains in joint specifications, parsimonious models, and the main robustness exercises. Other financial and managerial associations are identified as well. These findings suggest that environmental policy evaluation may benefit from distinguishing release changes associated with production expansion from those associated with investment-related adjustment and from allowing for variation across periods and production settings. For corporate managers, the same distinction can inform how emissions considerations are incorporated into capital budgeting and production planning.