Climate Change and Firm Valuation: Evidence from a Quasi-Natural Experiment

Philipp Krüger
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Philipp Krüger: University of Geneva and Swiss Finance Institute
Authors registered in the RePEc Author Service: Philipp Krueger

No 15-40, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: In this paper, I estimate the effect of mandatory greenhouse gas (GHG) emissions disclosure on corporate value. Using the introduction of mandatory GHG emissions reporting for firms listed on the Main Market of the London Stock Exchange as a source of exogenous variation, I find that firms most heavily affected by the regulation experience significantly positive valuation effects. Increases in value are strongest for large firms and for firms from carbon intensive industries (e.g., oil and gas). Valuation increases are driven by capital market effects such as higher liquidity and lower bid -- ask spreads for the most affected firms.

Keywords: Mandatory disclosure regulation; greenhouse gas emissions; climate change; valuation; difference-in-differences; value (search for similar items in EconPapers)
JEL-codes: D22 G18 G28 G38 K22 K32 L51 M48 Q52 Q54 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2015-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1540

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