Evaluating the effectiveness of an environmental disclosure policy: An application to New South Wales

The main purpose of introducing an environmental information disclosure strategy is to reduce informational asymmetries and put pressure on firms to reduce emissions. This paper studies the impact of such a policy on air quality in New South Wales (NSW), Australia. A regression discontinuity design is employed and the results show that pollutant concentration levels were not significantly affected after the implementation of the policy. Empirically, the estimates of the effects under the discontinuity-based OLS model have the opposite sign for some of the pollutants relative to the estimates from the basic OLS model. Therefore, basing conclusions on the OLS results will engender incorrect inference. Discontinuity-based results are robust to different model specifications.