Environmental Disclosure and the Cost of Capital: Evidence from the Fukushima Nuclear Disaster

Pietro Bonetti, Charles H. Cho and Giovanna Michelon

European Accounting Review, 2024, vol. 33, issue 5, 1693-1721

Abstract: We examine the relation between environmental disclosure and the cost of capital by exploiting the Fukushima nuclear disaster as a source of variation in the relevance of environmental information for investors. Using a large hand-collected sample of Japanese firms, we find that firms disclosing carbon emissions experience a lower increase in the cost of capital than non-disclosing firms. Cross-sectional analyses suggest that the association between disclosure and the cost of capital is driven by the increase in investor uncertainty about the energy supply shortage that followed the disaster rather than future regulatory costs. Moreover, we find that after the disaster, non-disclosing firms in the pre-disaster period increase their environmental disclosures to a greater extent relative to disclosing firms. Taken together, our results provide insight into the link between non-financial, unregulated disclosures and the cost of capital.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09638180.2023.2203410 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:euract:v:33:y:2024:i:5:p:1693-1721

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REAR20

DOI: 10.1080/09638180.2023.2203410

Access Statistics for this article

European Accounting Review is currently edited by Laurence van Lent

More articles in European Accounting Review from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().