CERCLA AND DEEP POCKETS - MARKET RESPONSE TO THE SUPERFUND PROGRAM

This paper uses event study methods to estimate wealth effects upon sh areholders who are named by the U.S. Environmental Protection Agency ( EPA) as potentially responsible parties at a Superfund site. Impacts a ppear to be divided into three periods: an initial program period wher e stock marker effects depend largely on prior visibility of the site, a second period where likely financial impact is more important, and a third period where notification has little association with either v isibility or financial measures. However, the expected remediation cos t burden is not borne evenly. ''Deep-pocket'' firms appear to be dispr oportionately penalized by the market during the second period.