AN EXAMINATION OF THE IMPACT OF POLLUTION PERFORMANCE ON ECONOMIC AND MARKET PERFORMANCE: PULP AND PAPER FIRMS.

This study evaluates the impact of pollution performance by pulp and paper firms on their economic and market performance. Pollution performance measurement is based on a pollution index developed from pollution emission reports filed with the regional offices of the Environmental Protection Agency by pulp and paper firms for their individual plants. Economic performance is measured by Net Income, ROE, ROA, Cashflow/Equity and Cashflow/Assets; market performance is measured by the PE ratio and systematic risk. The association between the pollution index and economic and market performance variables is tested by the Pearson Correlation coefficients. The results of this study indicate that, in the short run, pollution performance is negatively associated with economic performance and that the markets do not reward good pollution performance. Strict pollution standards may be desirable for forcing management to undertake pollution abatement activities to achieve a cleaner environment. [ABSTRACT FROM AUTHOR]