Climate Risk Disclosure and Institutional Investors
72 Pages Posted: 19 Aug 2019 Last revised: 8 Jul 2020
Date Written: June 29, 2020
Given ambiguity concerning the effects of disclosure on firm value and markets, we examine the question of whether investors value carbon risk disclosure. Through a survey and empirical tests, we conclude that many institutional investors consider climate risk reporting to be as important as financial reporting. However, systematic variation exists in their opinions depending on firm characteristics, investor characteristics and investor beliefs about climate change. Our empirical tests show that greater institutional ownership, particularly investors from high social norm countries, is associated with a higher propensity of firms to voluntarily disclose their carbon emissions and to provide higher quality information.
Keywords: climate finance, climate risk disclosure, institutional investors
JEL Classification: G11, G3, Q54
Suggested Citation: Suggested Citation