Climate-Related Attention in Capital Markets: Evidence from China’s Carbon Neutrality Pledge Announcement

We study retail investors’ demand for climate-related information using China’s interactive investor platforms, where investors ask questions directly to firms. Demand for carbon-related information increased significantly following China’s carbon-neutrality pledge. We classify questions as related to technology, financial performance, and general inquiries. Financial and general questions are associated with short-horizon abnormal returns that subsequently reverse, consistent with behavioral (i.e., non-fundamental) attention. Technology questions are associated with long-horizon positive abnormal returns, analyst forecast revisions, and volatility, consistent with firms receiving these questions experiencing greater risks and returns from the energy transition. Retail and institutional trading patterns are consistent with these interpretations.

Keywords: ESG, climate-related disclosure, net-zero pledges

JEL Classification: D62, G14, G18, M40, Q40, Q56

Suggested Citation: Suggested Citation

Friedman, Henry L. and Huang, Kanyuan and Wu, Kaiwen, Climate-Related Attention in Capital Markets: Evidence from China’s Carbon Neutrality Pledge Announcement (July 20, 2023). Available at SSRN: https://ssrn.com/abstract=4266526 or http://dx.doi.org/10.2139/ssrn.4266526