  The dissertation consists of three essays on responsible and sustainable
finance. I show that local communities should be seen as stakeholders to
decisions made by corporations. In the first essay, I examine whether the
imposition of fiduciary duty on municipal advisors affects bond yields and
advising fees. Using a difference-in-differences analysis, I show that bond
yields reduce by 9\% after the imposition of the SEC Municipal Advisor Rule. In
the second essay, we analyze the impact of USD 40 billion of corporate
subsidies given by U.S. local governments on their borrowing costs. We find
that winning counties experience a 15 bps increase in bond yield spread as
compared to the losing counties. In the third essay, we provide new evidence
that the bankruptcy filing of a locally-headquartered and publicly-listed
manufacturing firm imposes externalities on the local governments. Compared to
matched counties with similar economic trends, municipal bond yields for
affected counties increase by 10 bps within a year of the firm filing for
bankruptcy. The final essay examines whether managers walk the talk on the
environmental and social discussion. We train a deep-learning model on various
corporate sustainability frameworks to construct a comprehensive Environmental
and Social (E and S) dictionary. Using this dictionary, we find that the
discussion of environmental topics in the earnings conference calls of U.S.
public firms is associated with higher pollution abatement and more future
green patents.
