Climate Risk Disclosure and Institutional Investors
77 Pages Posted: 19 Aug 2019 Last revised: 12 Oct 2021
Date Written: September 29, 2021
Employing disclosure theory, we develop hypotheses regarding the preferences of institutional investors with respect to firms’ climate risk disclosures. Through a survey and empirical tests, we test these hypotheses and provide systematic evidence suggesting that institutional investors value and demand climate risk disclosures, that climate-specific disclosure costs and benefits affect these demands, and that influence and selection effects explain the equilibrium relations between institutional ownership and disclosure. We establish evidence on the influence and selection effects of the climate risk disclosures by examining the French Article 173, the investor coalition Climate Action 100+, and the UK mandatory carbon disclosure regulation.
Keywords: Climate risks, disclosure, non-financial reporting, institutional investors
JEL Classification: G11, G3, Q54
Suggested Citation: Suggested Citation