The effects of the Paris climate agreement on stock markets: evidence from the German stock market

Pham, Huy; Nguyen, Van Du; Ramiah, Vikash; Saleem, Kashif; Moosa, Nisreen

doi:10.1080/00036846.2019.1645284

Cited by 47 publications

(15 citation statements)

References 16 publications

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“…Because the PA was not a one-day event, it appears that the sectors analyzed here anticipated some changes in climate change policy since the CAR of the fossil fuel and transport sectors also decreased before the agreement announcement, corroborating the results of Pham et al (2019) for Germany and Diaz-Rainey et al (2021) for the US oil and gas companies. However, new information about the agreement reached further reduced asset values in the U.S.A. as was the case for the EU (Birindelli and Chiappini 2021).…”

Section: Discussionsupporting

confidence: 75%

“…We hypothesize that the stock market can efficiently price in new information that these events carry. We assume that the stock market reaction to this systematic risk depends on the industry, similarly to Pham et al (2019) and Birindelli and Chiappini (2021). However, we follow the definition of climate policy-relevant sectors provided by Battiston et al (2017) to study the response of sector-specific exchangetraded funds (ETFs) to the events relevant to the climate change discussion and climate policy.…”

Section: Introductionmentioning

confidence: 99%

“…Previous event studies on climate policies looked at the European companies' response to the Paris Agreement (Pham et al 2019;Birindelli and Chiappini 2021), and reaction of energy stocks from Germany (Betzer, Doumet, and Rinne 2013;Sen and von Schickfus 2020), the U.S.A. (Diaz-Rainey et al 2021), and in worldwide comparison (Ferstl, Utz, and Wimmer 2012;Mukanjari and Sterner 2018) to Fukushima and the American election. Thus, this work differs from the previous research by focusing on a sector-specific response of the US ETFs to a set of events that includes Climategate, which has not been considered before in the financial studies.…”

Section: Introductionmentioning

confidence: 99%

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Climate change events and stock market returns

Antoniuk

Leirvik

2021

Journal of Sustainable Finance & Investment

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Using an event study methodology, we investigate how unexpected political events affect climate-sensitive sectors. We find that events related to climate change policy have significantly impacted returns. The clean energy sector benefitted from the Paris Agreement, Climategate, and Fukushima since these events increased climate change awareness and favor toward policies related to reducing the impact of climate change. For the utilities, energy-intensive, and transport sectors, these events imply increased transition-related political and market risks, which should be compensated. Events weakening climate change policy are associated with positive abnormal returns for the fossil energy sector. We further find that stock market investors are quick to adapt to new information related to climate change. Policymakers should be aware of such events' impact on the stock market because the investors are likely to price in both climate risk and expectation about sectors' growth.

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Section: Discussionsupporting

confidence: 75%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Climate change events and stock market returns

Antoniuk

Leirvik

2021

Journal of Sustainable Finance & Investment

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“…Miscellaneous effects come from the release of information about voluntary environmental certifications (e.g., Bouslah et al, 2010;Jacobs et al, 2010), the announcement of new green products or investments (e.g., Ba et al, 2013;Bose & Pal, 2012;Halme & Niskanen, 2001;Mathur & Mathur, 2000), and the establishment of new environmental regulations (e.g., Blacconiere & Northcut, 1997;Jiang & Luo, 2018;Pham et al, 2019;Ramiah et al, 2013Ramiah et al, , 2015 (Heflin & Wallace, 2017;Patten & Nance, 1998) and, more in general, when eco-harmful events are announced (Flammer, 2013). Therefore, environmental commitment "may act as 'insurance', reducing negative reactions by shareholders to the announcement of eco-harmful events" (Flammer, 2013, p. 759).…”

Section: Environment-related Events and Shareholder Wealth Effectmentioning

confidence: 99%

Climate change policies: Good news or bad news for firms in the European Union?

Birindelli

Chiappini

2020

Corp Soc Responsibility Env

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This paper investigates whether the European Union policies to tackle climate change create or destroy value for shareholders over the years 2013–2018. Using the event study method, our results suggest that all the sectors were affected by at least one climate policy announcement and that negative effects were more common than positive effects, especially when the Paris Agreement came into force. Up until that point, the announcement of a new policy produced significant positive effects only on the most environmentally committed firms. Finally, data panel regressions reveal that the company's sector, more than its environmental commitment, played a central role in determining market reactions toward climate policies. Our paper contributes to the still limited debate on the relationship between environmental regulation and value for equity investors and opens up the debate on a topic yet to be explored: the mitigating role of the company's environmental commitment. Relevant implications for policy makers promoting a European sustainable economy are also discussed.

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“…Their results are mainly valid for carbon-intensive industries that are less able to pass on carbon costs on their final goods. Similarly, Pham et al (2019) consider German firms, whereas Pham et al (2020) consider French firms.…”

Section: Policy (Change)mentioning

confidence: 99%

Shareholders and the environment: a review of four decades of academic research

Capelle-Blancard

Desroziers

Scholtens

2021

Environ. Res. Lett.

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We provide a synthesis of four decades of empirical research regarding the reaction of shareholders to environmental events. This literature is at the crossroads of finance, environmental economics, management and corporate social responsibility (CSR). To set the stage, we first provide an account of the Brumadinho ecological disaster that occurred in Brazil on January 25th, 2019. Second, we provide a critical review of more than 100 event studies. These papers cover a diverse set of events, such as industrial accidents, public disclosure programs, legal actions following environmental violations, changes in environmental regulation, environmental news, and corporate initiatives. This review makes four contributions. First is the synthesis of a large strand of literature in a structured setting, so as to be readily handled by both experts and non-experts. Second is the observation that stock market penalties in the event of environmental concerns are likely to be quite low: on average there is a (temporary) drop in the excess stock market return to events that are harmful to the environment of about 2% and the median is −0.6%. Third is to highlight the limits of CSR as a business strategy towards a sustainable society. Fourth is to provide an open access bibliographic database.

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The effects of the Paris climate agreement on stock markets: evidence from the German stock market

Cited by 47 publications

References 16 publications

Climate change events and stock market returns

Climate change events and stock market returns

Climate change policies: Good news or bad news for firms in the European Union?

Shareholders and the environment: a review of four decades of academic research

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