Firm value and government commitment to combating climate change

Henk Berkman, Jonathan Jona and Naomi Soderstrom

Pacific-Basin Finance Journal, 2019, vol. 53, issue C, 297-307

Abstract: •We examine the impact of government commitment to combating climate change on firm value.•The Ceres/CookESG climate risk measure based on 10-K disclosures is a useful measure of firm-specific climate risk.•We use this climate risk measure to form “climate risk hedge portfolios”.•There is a significant -0.5 percent abnormal return for our US hedge portfolio around signing of the Paris agreement.•For US firms, there is a significant 1 percent abnormal return around the election of President Trump.•There is a further positive abnormal return of around 4 percent in the six months following President Trump’s inauguration.•Non-US polluters were disadvantaged by the actual policies of the Trump government.•Californian state-level regulation acted as an effective substitute for federal level regulations.

Keywords: Climate risk; Market valuation; Government; President Trump; Event study; Climate change; Paris agreement on climate change; Cost of regulation (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:53:y:2019:i:c:p:297-307

DOI: 10.1016/j.pacfin.2018.11.003

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