Download this Paper Open PDF in Browser

Climate Change and Firm Valuation: Evidence from a Quasi-Natural Experiment

59 Pages Posted: 17 Feb 2015 Last revised: 28 Oct 2015

Philipp Krueger

University of Geneva; University of Geneva - Geneva Finance Research Institute; Swiss Finance Institute

Date Written: February 15, 2015

Abstract

In this paper, I estimate the effect of mandatory greenhouse gas (GHG) emissions disclosure on corporate value. Using the introduction of mandatory GHG emissions reporting for firms listed on the Main Market of the London Stock Exchange as a source of exogenous variation, I find that firms most heavily affected by the regulation experience significantly positive valuation effects. Increases in value are strongest for large firms and for firms from carbon intensive industries (e.g., oil and gas). Valuation increases are driven by capital market effects such as higher liquidity and lower bid -- ask spreads for the most affected firms.

Keywords: Mandatory disclosure regulation, greenhouse gas emissions, climate change, valuation, difference-in-differences, value

JEL Classification: D22, G18, G28, G38, K22, K32, L51, M48, Q52, Q54

Suggested Citation

Krueger, Philipp, Climate Change and Firm Valuation: Evidence from a Quasi-Natural Experiment (February 15, 2015). Swiss Finance Institute Research Paper No. 15-40. Available at SSRN: https://ssrn.com/abstract=2565523 or http://dx.doi.org/10.2139/ssrn.2565523

Philipp Krueger (Contact Author)

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

University of Geneva - Geneva Finance Research Institute ( email )

Geneva
Switzerland

Swiss Finance Institute ( email )

Switzerland

Paper statistics

Downloads
602
Rank
35,842
Abstract Views
3,098