EconPapers    
Economics at your fingertips  
 

Voluntary corporate environmental initiatives and shareholder wealth

Karen Fisher-Vanden and Karin Thorburn ()

Journal of Environmental Economics and Management, 2011, vol. 62, issue 3, 430-445

Abstract: Researchers debate whether environmental investments reduce firm value or actually improve financial performance. We provide some compelling evidence on shareholder wealth effects of membership in voluntary environmental programs (VEPs). Companies announcing membership in EPA's Climate Leaders, a program targeting reductions in greenhouse gas emissions, experience significantly negative abnormal stock returns. The price decline is larger in firms with poor corporate governance structures, and for high market-to-book (i.e., high growth) firms. However, firms joining Ceres, a program involving more general environmental commitments, have insignificant announcement returns, as do portfolios of industry rivals. Overall, corporate commitments to reduce greenhouse gas emissions appear to conflict with firm value maximization. This has important implications for policies that rely on voluntary initiatives to address climate change. Further, we find that firms facing climate-related shareholder resolutions or firms with weak corporate governance standards – giving managers the discretion to make such voluntary environmentally responsible investment decisions – are more likely to join Climate Leaders; decisions that may result in lower firm value.

Keywords: Corporate social responsibility; Environmentally responsible investing; Climate change; Greenhouse gas emissions; Capital expenditures; Shareholder wealth (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (126)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069611000568
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Voluntary Corporate Environmental Initiatives and Shareholder Wealth (2008) Downloads
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:eee:jeeman:v:62:y:2011:i:3:p:430-445

DOI: 10.1016/j.jeem.2011.04.003

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-23
Handle: RePEc:eee:jeeman:v:62:y:2011:i:3:p:430-445