Corporate carbon footprint and market valuation of restructuring announcements

Gbenga Adamolekun () and Anthony Kyiu ()
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Gbenga Adamolekun: Edinburgh Napier University
Anthony Kyiu: Durham University

Review of Quantitative Finance and Accounting, 2025, vol. 64, issue 2, No 4, 595-620

Abstract: Abstract The call for greener and more sustainable corporate practices triggered a surge in corporate restructuring. In this study, we investigate the impact of carbon emissions on the market reaction to announcements of corporate restructuring activities. Using a sample of US firms, we find that investors discount the value of corporate restructuring announcements when firms have higher levels of carbon emissions. Our results indicate that emissions are negatively associated with cumulative abnormal returns (CAR), cumulative total returns (CTR), and buy and hold abnormal returns (BHAR) around announcements. This effect is more pronounced for firms with a lower risk of bankruptcy, those financially constrained, and those with lower growth opportunities. We also find that high emissions at announcements are negatively associated with post-restructuring financial and market performance. Overall, our results highlight the growing implications of firm-level carbon emissions for corporate market valuations, especially amongst firms undertaking restructuring.

Keywords: Carbon emissions; Corporate carbon footprint; Corporate reorganization; Corporate restructuring; Market reaction; ESG (search for similar items in EconPapers)
JEL-codes: G30 G34 Q51 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11156-024-01315-y

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