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

Abstract

ESG ratings capture only a narrow segment of firms, reflecting heavier monitoring of large or high-impact companies and limited scrutiny of smaller or service-sector firms. The resulting sample selection raises the question of whether sustainable finance rewards substantive performance or merely visibility and disclosure ability. This study examines whether firms’ environmental, social, and governance (ESG) performance impacts their cost of capital in U.S. markets and the degree to which firm characteristics, such as size and disclosure capacity, influence this relationship. Using an unbalanced panel of U.S.-listed firms from 2015 to 2021, I estimate fixed-effects and two-stage least squares models to identify the causal effect of ESG on both the implied cost of equity and the cost of debt. To address non-random ESG coverage, I implement a selection correction model that estimates the probability of a firm receiving an ESG score. The results show that stronger ESG performance is consistently associated with a lower cost of debt, while the effect on the cost of equity is smaller and less robust. After correcting for endogeneity and selection, ESG performance is negatively associated with the cost of capital across both markets. Differences across markets suggest that equity and debt investors interpret sustainability information through distinct channels, reflecting variation in risk sensitivity, investment horizons, and engagement styles.

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.