Carbon Disclosure and the Cost of Capital
52 Pages Posted: 19 Jan 2021 Last revised: 15 Nov 2021
Patrick Bolton
Columbia University - Columbia Business School, Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
Marcin T. Kacperczyk
Imperial College London - Accounting, Finance, and Macroeconomics; Centre for Economic Policy Research (CEPR)
Date Written: November 13, 2021
Abstract
We estimate effects of voluntary and mandatory disclosure of carbon emissions on stock returns and volatility using a large global sample of publicly listed firms. We find that voluntary disclosure of scope 1 emissions by companies results in lower stock returns relative to non-disclosing companies. However, a cost of disclosing emissions is increased divestment by institutional investors. We also find that U.K. mandatory carbon disclosure rules for publicly traded companies resulted in lower stock-level uncertainty. The effect of these mandatory disclosure rules also spilled over into other markets, especially those with close geographic and economic proximity, and companies in the same industry.
Keywords: Carbon Emissions, Voluntary and Mandatory Disclosure, Stock Returns
JEL Classification: G12, G23, G30, D62, D83
Suggested Citation: Suggested Citation
Patrick Bolton

Columbia University - Columbia Business School, Economics ( email )
420 West 118th Street
New York, NY 10027
United States
Centre for Economic Policy Research (CEPR)
London
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Marcin T. Kacperczyk (Contact Author)
Imperial College London - Accounting, Finance, and Macroeconomics ( email )
South Kensington campus
London SW7 2AZ
United Kingdom
Centre for Economic Policy Research (CEPR) ( email )
London
United Kingdom
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