1. "Capital Markets' Response to ESG"* (Job Market Paper)

Abstract

This study investigates whether firms’ Environmental, Social, and Governance (ESG) performance influences their cost of equity and cost of debt in U.S. capital markets. Using panel data from 2014 to 2022, I analyze both financing channels within a unified empirical framework, addressing a gap in the literature that often considers them separately. A key econometric challenge is that firms with lower financing costs may be more likely to invest in ESG, creating concerns of endogeneity and selection bias. To address this, I implement a fixed-effects two-stage least squares estimator that accounts for endogenous regressors in panel settings. The results show that stronger ESG performance is consistently associated with lower costs of debt, consistent with creditors perceiving ESG as reducing credit risk. For the cost of equity, baseline fixed-effects models yield no significant relationship, while specifications that correct for endogeneity reveal a negative and significant association. Overall, the findings suggest that ESG performance is consistently linked to lower costs of debt, while its effect on the cost of equity becomes apparent only after correcting for endogeneity, underscoring that ESG is not priced uniformly across capital markets and that careful attention to selection and endogeneity is essential for evaluating its financial implications.

2. "C-PACE Financing and Policy Structures in Wayne County"* (with C. Adamczyk)

Abstract

Property Assessed Clean Energy (PACE) financing is an innovative tool that provides property owners with access to capital for energy efficiency, renewable energy, and water conservation improvements through a special assessment on their property tax bill. By reducing upfront capital barriers, PACE advances local environmental and social goals while offering long-term economic benefits. In Michigan, the commercial PACE (C-PACE) market has expanded significantly, with over $300 million in cumulative assessments statewide and more than $100 million in Wayne County alone as of November 2024. This white paper examines the role of C-PACE in supporting Wayne County’s sustainability objectives, as outlined in the region’s Priority Climate Action Plan. Drawing on Detroit-area case studies and Michigan’s program framework, this paper examines how C-PACE helps local property owners cut emissions, reduce costs, and upgrade building performance. It also highlights key trends shaping the future of C-PACE in Michigan, including recent policy changes, technology innovation, and broader market participation.