Investor Rewards to Climate Responsibility: Stock-Price Responses to the Opposite Shocks of the 2016 and 2020 U.S. Elections

Alexander Wagner, Stefano Ramelli, Richard Zeckhauser and Alexandre Ziegler

No 13206, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Donald Trump's 2016 election and his nomination of climate skeptic Scott Pruitt to head the Environmental Protection Agency drastically downshifted expectations on U.S. policy toward climate change. Joseph Biden's 2020 election shifted them dramatically upward. We study firms' stock-price movements in reaction. As expected, the 2016 election boosted carbon-intensive firms. Surprisingly, firms with climate-responsible strategies also gained, especially those firms held by long-run investors. Such investors appear to have bet on a "boomerang" in climate policy. Harbingers of a boomerang already appeared during Trump's term. The 2020 election marked its arrival.

Keywords: Climate finance; Climate policy; Csr; Election surprise; ESG; Event study; Institutional investors; Stock returns; Policy boomerang (search for similar items in EconPapers)
JEL-codes: G14 G38 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Journal Article: Investor Rewards to Climate Responsibility: Stock-Price Responses to the Opposite Shocks of the 2016 and 2020 U.S. Elections (2021)
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