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Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election

Stefano Ramelli, Alexander F. Wagner, Richard Zeckhauser () and Alexandre Ziegler
Additional contact information
Stefano Ramelli: University of Zurich - Department of Banking and Finance
Alexander F. Wagner: University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute
Alexandre Ziegler: University of Zurich - Department of Banking and Finance

No 18-63, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Donald Trump's 2016 election and the subsequent nomination of Scott Pruitt, a climate skeptic, to lead the Environmental Protection Agency drastically downshifted expectations on US climate change policy. Firms' stock-price reactions to these events reveal whether their climate strategies affected their valuations. As widely reported, firms in industries with high carbon intensity benefited, at least briefly. It might be expected that companies with "responsible" strategies on climate change would also have lost value, since they were paying for actions that seemed less urgent. In fact, investors actually rewarded such firms. The analysis shows that this observed climate responsibility premium results, at least in part, from the strategic behavior of long-horizon investors who looked into the future to assess the valuation of corporations.

Keywords: Climate change; CSR; election surprise; ESG; event study; stock returns (search for similar items in EconPapers)
JEL-codes: G14 G38 G41 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2018-09
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-res
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Related works:
Working Paper: Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election (2018) Downloads
Working Paper: Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election (2018) Downloads
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