The Effect of Anti-SLAPP Statutes on Corporate Pollution: the Role of Local Stakeholders and Investors

Abstract

Stakeholders (e.g., citizens, environmental groups, and the media) can monitor pollution by reporting, testifying, and filing lawsuits against environmental violations. However, these monitoring activities can be threatened by strategic suits from polluting firms. Anti-SLAPP (Strategic Lawsuit Against Public Participation) statutes reduce this threat by enabling the defendants to dismiss the suits quickly and recover legal costs. Based on a difference-in-differences approach, we find strong evidence using plant-level data that the enactment of anti-SLAPP statutes reduces corporate toxic emissions. The effect is stronger when the anti-SLAPP statutes provide stronger protection and when local stakeholders have stronger incentives and abilities to monitor pollution. The effect is also stronger for plants with nearby socially responsible mutual funds, suggesting the protection of local stakeholders facilitates the environmental engagement by socially responsible investors. Overall, our paper highlights the importance of legal protection of civic participation in reducing corporate pollution and has policy implications for lawmakers worldwide considering legislating or improving anti-SLAPP laws.