Carbon Emissions and Firm Value

49 Pages Posted: 9 Oct 2010 Last revised: 4 Jun 2013

Ella Mae Matsumura

University of Wisconsin-Madison - Department of Accounting and Information Systems

Rachna Prakash

University of Mississippi - Patterson School of Accountancy

Sandra C. Vera-Munoz

University of Notre Dame - Department of Accountancy

Date Written: September 8, 2010

Abstract

Using hand-collected carbon emissions data for 2006-2008 that S&P 500 firms disclosed voluntarily to the Carbon Disclosure Project, we investigate the relationship between carbon emission levels and firm value. The study is motivated by a relationship between carbon emissions and global climate change that some informed observers expect will drive a redistribution of value from firms that do not control carbon emissions successfully to firms that do (GS Sustain [2009]). Concern about carbon emissions is shared by corporate executives, boards of directors, investors, creditors, standard setters, government regulators, and NGOs. We control for systematic firm-level characteristics that may be associated with managers’ decisions whether or not to voluntarily disclose carbon emissions. We find a negative association between carbon emission levels and firm value, contingent upon firms voluntarily disclosing their carbon emissions in the first place. Our sensitivity analyses and robustness test results are qualitatively similar to our main results.

Keywords: GHG emissions, Voluntary Disclosures

Suggested Citation

Matsumura, Ella Mae and Prakash, Rachna and Vera-Munoz, Sandra C., Carbon Emissions and Firm Value (September 8, 2010). Available at SSRN: https://ssrn.com/abstract=1688738 or http://dx.doi.org/10.2139/ssrn.1688738

Ella Mae Matsumura

University of Wisconsin-Madison - Department of Accounting and Information Systems ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States
608-262-9731 (Phone)
608-265-6040 (Fax)

Rachna Prakash (Contact Author)

University of Mississippi - Patterson School of Accountancy ( email )

200 Conner Hall
University, MS 38677
United States

Sandra C. Vera-Munoz

University of Notre Dame - Department of Accountancy ( email )

248 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
574-631-9041 (Phone)
574-631-5255 (Fax)

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