STOCK MARKET REACTIONS TO PUBLIC RELEASE OF ENVIRONMENTAL RANKINGS OF HEAVY POLLUTERS: THE ROLE OF ULTIMATE CONTROLLERS

Hua Xu (), Xin Deng () and Jie Shen
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Hua Xu: UniSA Business, University of South Australia, GPO Box 2471, Adelaide, SA 5000, Australia
Xin Deng: UniSA Business, University of South Australia, GPO Box 2471, Adelaide, SA 5000, Australia
Jie Shen: Shenzhen Audencia Fintech Institute, Shenzhen University, Nanhai Avenue, 518060 Shenzhen, P. R. China

The Singapore Economic Review (SER), 2024, vol. 69, issue 05, 1765-1786

Abstract: Adopting the event study method, this paper examines how the stock market reacts to the public release of environmental performance rankings of heavy polluters. Specifically, we explore the impact of the public release of the 100 best and 100 worst companies in terms of environmental performance on the stock prices of companies involved, and the potential moderation of ultimate controllers. We find that the stock prices of the companies on the lists were negatively affected by the event. However, stock price changes are not significantly related to the relative rankings on the list. Furthermore, companies whose ultimate controllers possess a larger control–ownership wedge experienced a less severe fall in stock prices than did their counterparts. This study sheds light on the nuances of the financial implications of negative environmental publicity.

Keywords: Corporate environmental event; environmental performance; ranking; stock price; ultimate controller (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0217590824420062

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