Carbon Stock Devaluation

73 Pages Posted: 29 May 2020 Last revised: 30 Aug 2022

See all articles by Darwin Choi

Darwin Choi

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Zhenyu Gao

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Wenxi Jiang

CUHK Business School, The Chinese University of Hong Kong

Hulai Zhang

Tilburg University - Department of Finance; ESCP Business School - Department of Finance

Date Written: August 30, 2022

Abstract

Using global evidence, we show that high-emission firms tend to have lower price valuation ratios than low-emission firms in the same country, especially in recent years. The price gap coincides with heightened climate awareness following local natural disasters, as well as with the divestment from high-emission stocks by financial institutions and retail investors. In the presence of equity price pressure in the country, high-emission firms reduce carbon emissions, increase green innovation activities, and decrease dividends and stock repurchases. The changes we identify are unlikely a consequence of tighter environmental regulations, as private high-emission firms do not show the same results.

Keywords: Price Valuation, Divestment, Climate Awareness, Carbon Emissions, Green Innovation

JEL Classification: D83, G11, G15, G23, Q54

Suggested Citation

Choi, Darwin and Gao, Zhenyu and Jiang, Wenxi and Zhang, Hulai, Carbon Stock Devaluation (August 30, 2022). Available at SSRN: https://ssrn.com/abstract=3589952 or http://dx.doi.org/10.2139/ssrn.3589952

Darwin Choi (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Zhenyu Gao

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong
(852)39431824 (Phone)

HOME PAGE: http://sites.google.com/site/gao515515/

Wenxi Jiang

CUHK Business School, The Chinese University of Hong Kong ( email )

Room 1210, Cheng Yu Tung Building
Chinese University of Hong Kong
Shatin, NT 06520
Hong Kong

HOME PAGE: http://https://sites.google.com/site/jiangwenxi/

Hulai Zhang

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

ESCP Business School - Department of Finance ( email )

79 avenue de la République
Paris, 75011
France

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