Toxics release information: A policy tool for environmental protection

This study examines investor reactions to the repeated public disclosure of environmental information about firms in the chemical industry and the effectiveness of this information as a decentralized mechanism for deterring their pollution. By allowing investors to benchmark the performance of firms, repeated provision of the Toxics Release Inventory led firms to incur statistically significant negative stock market returns during the one-day period following the disclosure of that information in the years 1990-1994. These losses had a significant negative impact on subsequent on-site toxic releases and a significant positive impact on wastes transferred off site, but their impact on total toxic wastes generated by these firms is negligible.