The overall purpose of this research is to determine what short- and long-term impact EPA actions have on the value of firms cited for pollution law violations. The firm's true owners are its stockholders. If these stockholders perceive an EPA action brought against their firm as a costly
event due to the required payment of fines, the costs of compliance, or lost sales, then they bear the penalty. The study will undertake a detailed analysis of stock price actions using well developed methodologies from the financial economics literature. Legislation on the value of firms
and industries most likely to be affected will be analyzed. The results will provide EPA and the general public with a clearer understanding of the linkage between EPA actions and the actual penalties assessed to the true owners of the firm, its stockholders. The information will provide EPA with a clear picture of the effectiveness of its past efforts and suggest ways in which its future efforts could be redirected to greatest influence.