Does the market value greenhouse gas emissions? Evidence from multi-country firm data

Bobae Choi and Le Luo

The British Accounting Review, 2021, vol. 53, issue 1

Abstract: Despite increasing global attention on corporate carbon emissions, few studies have examined the value relevance of carbon emission information in the international context. This paper examines whether carbon emission information voluntarily disclosed by a firm affects its market value. After controlling for a firm's likelihood to provide voluntary carbon disclosures, we find that the level of carbon emissions is negatively related to firm value. This negative impact is more prominent for firms in countries that have a national carbon emission trading scheme and stringent environmental regulations. Furthermore, corporate governance is found to reduce the negative value effect of carbon emissions, indicating that shareholders have favorable perceptions regarding the carbon management ability of firms with good corporate governance. Cultural contexts such as uncertainty avoidance and long-term orientation also affect the value effect of risks and future liabilities associated with carbon emissions. We find that the value-decreasing effect of carbon emissions is weaker in countries characterized by high uncertainty avoidance and long-term orientations.

Keywords: Carbon emission; Market value; Sustainability; Business and the environment; National culture; Carbon regulation; ETS (search for similar items in EconPapers)
JEL-codes: G32 M41 Q51 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:53:y:2021:i:1:s0890838920300299

DOI: 10.1016/j.bar.2020.100909

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