Congratulations to Prof. Emilio Bisetti and our PhD student Xiao Zhao whose paper titled "Smokestacks and the Swamp" and co-authored with Stefan Lewellen, Arko Sarkar received the Indian National Stock Exchange best paper award at the Indian School of Business Summer Research Conference.

The Indian National Stock Exchange (NSE) Best Paper Award is awarded annually to the authors of the best paper presented at the Summer Research Conference in Finance organized by the Indian School of Business' Centre for Analytical Finance. This year, the award committee included Prof. Sumit Agarwal from the National University of Singapore, Prof. Amit Goyal from the University of Lausanne, and Prof. Prasanna Tantri from the Indian School of Business. More information about the award is available here: https://www.isb.edu/en/src-2022.html

Prof. Emilio Bisetti’s and Xiao Zhao’s paper examines the causal effect of politicians’ partisan ideologies on firms’ industrial pollution decisions. Comparing US districts marginally won by Democrats and US districts marginally won by Republicans, the authors find that plants increase pollution and invest less in abatement following close Republican wins.

This paper also finds evidence of reallocation: firms shift emissions away from areas represented by Democrats. However, costs rise and firm market values decline for firms whose representation becomes more Democratic, suggesting that politicians’ ideological demands can be privately costly. Pollution-related illnesses spike around plants in Republican districts, suggesting that firms’ passthrough of politicians’ ideologies can have real consequences for local communities.

The latest version of the paper is available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3947936