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- Title
Fracking Disclosure, Collateral Value, and the Mortgage Market.
- Authors
Sinha, Kirti
- Abstract
This paper examines whether laws requiring oil and gas firms to disclose the chemicals used in their fracking operations affect the mortgage lending activity for properties located in nearby areas. I hypothesize and find that the disclosure mandate reduces uncertainty about the value of housing collateral and subsequently increases (1) the probability of obtaining a mortgage by 2.5 percentage points (pp), and (2) loan-to-value by 2.2 pp. My main analyses exploit the variation in the location of properties relative to fracking wells. Cross-sectional tests that exploit heterogeneity in drinking water sources and the content of firm disclosures further substantiate my inferences and mitigate endogeneity concerns. These findings suggest that disclosure regulation for oil and gas firms affects housing collateral values, thereby impacting the mortgage market. JEL Classifications: G14; G21; G32; G38; K22; L71; M41; M48.
- Subjects
HYDRAULIC fracturing; DISCLOSURE laws; COLLATERAL security; MORTGAGE banks; CHEMICALS; PETROLEUM law &; legislation; GAS industry laws; HOUSING; VALUATION of real property
- Publication
Accounting Review, 2022, Vol 97, Issue 5, p427
- ISSN
0001-4826
- Publication type
Article
- DOI
10.2308/TAR-2020-0119