Abstract: Evidence suggests firms that engage in voluntary efforts to prevent pollution experience financial gains due to innovation. It is also contended that firms which develop cleaner processes or products not only reduce waste but also benefit in terms of improved efficiency. Using a control sample, Professor Arora examines whether firms engaging in pollution prevention systematically outperform firms that do not. This research combines pollution data from the Toxics Release Inventory with the stock market data from the Center for Research in Security Prices.