Climate Risk Disclosure and Institutional Investors

66 Pages Posted: 19 Aug 2019 Last revised: 30 Jun 2020

See all articles by Emirhan Ilhan

Emirhan Ilhan

Frankfurt School of Finance & Management

Philipp Krueger

University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute

Zacharias Sautner

Frankfurt School of Finance & Management gemeinnützige GmbH; European Corporate Governance Institute (ECGI)

Laura T. Starks

University of Texas at Austin - Department of Finance

Date Written: June 29, 2020

Abstract

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, transparency, institutional investors

JEL Classification: G11, G3, Q54

Suggested Citation

Ilhan, Emirhan and Krueger, Philipp and Sautner, Zacharias and Starks, Laura T., Climate Risk Disclosure and Institutional Investors (June 29, 2020). Swiss Finance Institute Research Paper No. 19-66; European Corporate Governance Institute – Finance Working Paper No. 661/2020. Available at SSRN: https://ssrn.com/abstract=3437178 or http://dx.doi.org/10.2139/ssrn.3437178

Emirhan Ilhan

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://emirhanilhan.github.io

Philipp Krueger

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, Geneva 1211
Switzerland

Swiss Finance Institute ( email )

Switzerland

Zacharias Sautner (Contact Author)

Frankfurt School of Finance & Management gemeinnützige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Laura T. Starks

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
534
Abstract Views
2,065
rank
55,717
PlumX Metrics