Market Effects of Voluntary Climate Action by Firms: Evidence from the Chicago Climate Exchange

Will Gans () and Beat Hintermann

Environmental & Resource Economics, 2013, vol. 55, issue 2, 308 pages

Abstract: Are private voluntary environmental actions by firms a sign of mismanagement, or a profitable “win-win” replacement for regulation? Empirical evidence is decidedly mixed. In this study, we use 19 years of monthly stock price returns, from 1991 to 2009, to examine the profitability of participation in CCX, a large voluntary greenhouse gas mitigation program. After controlling for systemic market risk as well as industry-specific shocks, we find statistically significant and positive excess returns for firms that announce their decision to join CCX. In addition, the progress of proposed greenhouse gas legislation (the Waxman–Markey bill) had a positive and large impact on excess returns for CCX member firms, suggesting that a major incentive for firms to join CCX may be to prepare for future regulation. Marginal abatement costs (proxied by the carbon price), on the other hand, were unrelated to excess returns. Our results imply that voluntary approaches should play a role in combating climate change, but that relying on them alone is not enough. Copyright Springer Science+Business Media Dordrecht 2013

Keywords: Voluntary action; Firm performance; Climate change; Permit markets; Corporate social responsibility (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10640-012-9626-7 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Market Effects of Voluntary Climate Action by Firms: Evidence from the Chicago Climate Exchange (2011)
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:kap:enreec:v:55:y:2013:i:2:p:291-308

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1007/s10640-012-9626-7

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().