Greenhouse Gas Emissions Mitigation and Firm Value: A Study of Large North-American and European Firms

Abstract:     
There is strong public pressure globally to mitigate GHG emissions even though regulatory requirements for GHG mitigation vary greatly among countries. However, research on the influence of GHG emissions mitigation on firm value has been inconclusive. This paper contributes by examining the impact of GHG emissions on firm value for a sample of over 600 large firms from the US, Canada, and Europe. We find that GHG emissions have a negative influence on firm value. However, we cannot document that GHG emission mitigation actions add to firm value. The value maximizing nature of such actions seems to be moderated by the nature and quality of corporate governance in a firm perhaps especially as absent any industry-wide regulatory requirements there is no direct link between such GHG mitigating actions and shareholder wealth maximization.

Number of Pages in PDF File: 38

Keywords: governance, environment, strategy

JEL Classification: G30, G34, Q54

working papers series