This paper analyzes the shareholder value effects of environmental performance by measuring the stock market reaction associated with announcements of environmental performance. We examine the market reaction to two categories of environmental performance. The first category includes 417 announcements of Corporate Environmental Initiatives (CEIs) that provide information about self‐reported corporate efforts to avoid, mitigate, or offset the environmental impacts of the firm's products, services, or processes. The second category includes 363 announcements of Environmental Awards and Certifications (EACs) that provide information about recognition granted by third‐parties specifically for environmental performance. Although the market does not react significantly to the aggregated CEI and EAC announcements, we find statistically significant market reactions for certain CEI and EAC subcategories. Specifically, announcements of philanthropic gifts for environmental causes are associated with significant positive market reaction, voluntary emission reductions are associated with significant negative market reaction, and ISO 14001 certifications are associated with significant positive market reaction. The difference between the market reactions to the CEI and EAC categories is statistically insignificant. Overall, the market is selective in reacting to announcements of environmental performance with certain types of announcements even valued negatively.

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M easures to extend the economic lives of products-such as remanufacturing carried out by closed-loop supply chains-are receiving increased attention because of various economic and regulatory factors. In this paper, we examine drivers of price differentials between new and remanufactured products using data on purchases made on eBay. Our analysis shows that seller reputation significantly explains the price differentials between new and remanufactured products. We also find that products remanufactured by original equipment manufacturers or their authorized factories are purchased at relatively higher prices than products remanufactured by third parties. However, in the presence of these reputation signals (seller reputation and remanufacturer identity), we find that stronger warranties are not significantly associated with higher prices paid for remanufactured products. Our work contributes to the closed-loop supply chain research stream in operations management by empirically examining market factors that have not been studied before.

W e investigate the implications of collective and individual producer responsibility (CPR and IPR, respectively) models of product take-back laws for e-waste on manufacturers' design for product recovery (DfR) choices and profits, and on consumer surplus in the presence of product competition. We show that IPR offers superior DfR incentives as compared to CPR, and provides a level competitive ground. CPR may distort competition and allow free-riding on DfR efforts to reduce product recovery costs. Thus, manufacturer preferences for IPR or CPR may differ because of the freeriding implications under CPR, with even high-end manufacturers having incentives to free-ride under certain competitive conditions. The policy choice between IPR and CPR is not clear cut from an economic welfare perspective. This choice involves a comparison between the effects of superior recovery cost reduction through improved DfR under IPR and the operational cost-efficiency under CPR.

This study contributes to a theoretical and empirical understanding of whether and how administrative environmental innovations (AEIs)-implemented to help track and manage a firm's environmental impacts-are related to environmental disclosure. Drawing on the Belief-Action-Outcome framework, we posit that the motivation of individuals (employees, managers, and the leadership) within the firm to access, use, and act on the environmental information available to them would be enhanced by the firm's implementation of AEIs, resulting in more extensive environmental disclosure by the firm. Additionally, building on the literature on supply chain networks, we posit that the structural position of the firm vis-à-vis its supply network-reflecting information flows, network learning, and status-moderates the AEI implementationenvironmental disclosure relationship. To test our hypotheses, we build a multi-industry dataset of 3,106 firm-year observations based on 67,809 dyadic cost-of-goods-sold-based relationships obtained from Bloomberg's supply chain relationships database to construct the supply networks of focal firms. We also draw on Bloomberg's environmental, social, and governance (ESG) data for our AEI implementation and environmental disclosure measures. We find significant evidence to support our hypothesis that AEI implementation is positively associated with the extent of environmental disclosure. However, the implementation of both internal and external forms of AEIs has a more pronounced positive relationship with the extent of environmental disclosure, compared to the implementation of either form alone. With regard to supply network structure, we identify three principal variables-accessibility, control, and interconnectedness-that influence network learning and status of the focal firm and find that they moderate the AEI implementation-environmental disclosure relationship. We provide insights for theory and practice based on our findings.

Extended producer responsibility (EPR) programs typically hold the producer—a single actor defined by the regulator—responsible for the environmental impacts of end‐of‐life products. This is despite emphasis on the need to involve all actors in the supply chain in order to best achieve the aims of EPR. In this paper, we examine the economic and environmental implications of product recovery mandates and shared responsibility within a supply chain. We use a two‐echelon model consisting of a supplier and a manufacturer to determine the impacts of product collection and recycling mandates on the incentive to recycle and resulting profits in the integrated and decentralized supply chains. For the decentralized supply chain, we demonstrate how the sharing of responsibility for product recovery between the echelons can improve total supply chain profit and suggest a contract menu that can Pareto‐improve profits. To examine both the economic and environmental performance associated with responsibility sharing, we propose a social welfare construct that includes supply chain profit, consumer surplus, and the externalities associated with virgin material extraction, product consumption, and disposal of nonrecycled products. Using a numerical example, we discuss how responsibility sharing may or may not improve social welfare. The results of this paper are of value to firms either anticipating or subject to product recovery legislation, and to social planners that attempt to balance economic and environmental impacts and ensure fairness of such legislation.

Extended Producer Responsibility (EPR) legislation focuses on the life‐cycle environmental performance of products and has significant implications for management theory and practice. In this paper, we examine the influence of EPR policy parameters on product design and coordination incentives in a durable product supply chain. We model a manufacturer supplying a remanufacturable product to a customer over multiple periods. The manufacturer invests in two design attributes of the product that impact costs incurred by the supply chain—performance, which affects the environmental impact of the product during use, and remanufacturability, which affects the environmental impact post‐use. Consistent with the goals of EPR policies, the manufacturer and the customer are required to share the environmental costs incurred over the product's life cycle. The customer has a continuing need for the services of the product and optimizes between the costs of product replacement and the costs incurred during use. We demonstrate how charges during use and post‐use can be used as levers to encourage environmentally favorable product design. We analyze the impact of supply chain coordination on design choices and profit and discuss contracts that can be used to achieve coordination, both under symmetric and asymmetric information about customer attributes.

Cap and trade programs impose limits on industry emissions but offer individual firms the flexibility to choose among different operational levers toward compliance, including inputs, process changes, and the use of allowances to account for emissions. In this paper, we examine the relationships among (1) levers for compliance (at-source pollution prevention, end-of-pipe pollution control, and the use of allowances); (2) environmental performance; and (3) firm market performance for the context of stringent cap and trade regulation with allowance grandfathering (i.e., the allocation of allowances for free). To investigate these relationships, we use data on publicly traded utility firms operating coal-fired generating units regulated by the U.S. Acid Rain Program from three principal sources: the U.S. Energy Information Administration, the U.S. Environmental Protection Agency, and the Compustat database. Our results indicate a significant relationship between better environmental performance and lower firm market performance over at least a three-year period. From a regulatory perspective, our results show a negative association between allowance grandfathering and firm environmental performance. Overall, by explicitly considering the context of stringent regulation, we find a counter-example to the view that better environmental performance generally associates with better economic performance