The Relevance to Investors of Greenhouse Gas Emission Disclosures

Griffin, Paul A.; Lont, David H.; Sun, Estelle

doi:10.1111/1911-3846.12298

Cited by 346 publications

(269 citation statements)

References 50 publications

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“…This finding reinforces the idea that capital markets are sensitive to emissions, and voluntary disclosure can help decision makers regarding firm valuations. Along the same lines, other results [24] indicate that for an S&P 500 index firm, GHG emissions impose an average equity discount of $79 per ton, which is about 0.5% of market capitalization. On the other hand, Krishnamurtia and Velayuthamn [25] found that Australian firms that voluntarily disclose higher-quality information on GHG emissions experience reduced stock price volatility and improved stock market liquidity.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 67%

Carbon Emissions by South American Companies: Driving Factors for Reporting Decisions and Emissions Reduction

2018

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In the last decade, companies have started to disclose information on carbon emissions. To our knowledge, this is the first paper to look into this phenomenon in South America, which is a very important geographical area regarding climate change because of the local nature and developing economies. This paper explores the relationships between some corporate variables and two important decisions: (i) whether to report carbon emissions, and (ii) the impact on the evolution of carbon emissions. Logit and linear panel data models are used to determine the driving factors for decisions (i) and (ii). Our results show that regarding the carbon reporting decision, a company's size, sustainability reporting, existence of a sustainability committee, and whether it belongs to a certain sector (telecom, utilities, and consumer discretionary) are significant positive factors, whereas the country is a negatively significant factor if the company is based in either Chile or Peru. Regarding the factors that lead to more sustainable behavior, our results reveal that a company's size, the existence of a corporate social responsibility (CSR) committee, and the disclosure of a sustainability report lead to a decrease in emissions levels.

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 67%

Carbon Emissions by South American Companies: Driving Factors for Reporting Decisions and Emissions Reduction

2018

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“…), apart from a few studies (e.g., Griffin et al. , Gallego‐Álvarez et al. ), it is largely ignored by the studies included in our sample.…”

Section: Discussionmentioning

confidence: 96%

“…), the results for market‐based measures demonstrate that investors appear to imply carbon emissions with an “off‐balance sheet valuation discount” (Griffin et al. ). Given the fact that the link between carbon performance and financial performance is significantly stronger for market‐based measures as compared to accounting measures, investors seem to incorporate present and future benefits from improvements in carbon performance.…”

Section: Discussionmentioning

confidence: 99%

Corporate Carbon and Financial Performance: A Meta‐analysis

Busch

Lewandowski

2017

J of Industrial Ecology

194

105

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We use meta-analytical techniques to address the question"When does it pay to be green?" Existing meta-studies in this research field cover a range of ecological issues and synthesize a variety of environmental performance measurements. This precludes a detailed examination of how differences in measurement approaches account for variations in empirical results. In order to conduct such an examination, we focus on only one ecological issue, climate change, and one particular operational performance dimension: corporate carbon performance as expressed by a firm's level of carbon dioxide (CO 2 ) emission equivalents. Our sample comprises 68 estimations from 32 empirical studies, covering a total of 101,775 observations. In addition to our examination of the causal relationship, we analyze whether differences in operationalizations of carbon performance and financial performance predetermine empirical outcomes. The meta-analytic findings indicate that carbon emissions vary inversely with financial performance, indicating that good carbon performance is generally positively related to superior financial performance. The results show that relative emissions are more likely to produce statistically significant results than absolute emissions. Furthermore, market-based measures of financial performance are more positively related to carbon performance than accounting-based measures. We conclude that measurement characteristics, which were not analyzed in detail by previous meta-studies, may present a great source of cross-study variability.

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“…For example, based on a US sample, Matsumura, Prakash, and Vera-Mu oz (2014) indicate that the markets penalize firms with higher carbon emissions, but a further penalty is imposed on firms that do not disclose emission information. Similarly, Griffin, Lont, and Sun (2017) used a sample of S&P500 companies over a period of 2006-2012 and found that investors view CDP amounts and estimates of emissions as equally value relevant. Other researchers examine the research question in the context of the European Union (Clarkson, Li, Pinnuck, & Richardson, 2015;Oestreich & Tsiakas, 2015), Japan (e.g.…”

Section: Literature Reviewmentioning

confidence: 99%

Market reactions to environmental policies: Evidence from China

Yan

Luo

2018

Corp Soc Responsibility Env

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The purpose of this study is to investigate Chinese market reaction to environmentalpolicy-related announcements from the Chinese government in response to the Copenhagen Climate Summit from 2009 to 2011. Based on a market model with a newly developed bootstrapping significance testing methodology, we find that market reactions to these policy-related announcements are significantly positive. Further, we test whether specific industry or firm characteristics can explain cross-sectional variation in these market reactions. Our results show that market reactions are more significantly positive for high-pollution industries than low-pollution industries. The study contributes to the understanding of how investors respond to announcements related to the Copenhagen Climate Summit in the context of China. In contrast to prior studies that examine directly whether a firm's abnormal return or cumulative abnormal return is negatively affected by environmental regulations, we conduct this study in a distinct way in that our results show that an expectation of delayed carbon legislation will affect a firm's abnormal return positively, which indicates that the market is likely to respond negatively to an immediate implementation of carbon legislations.

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The Relevance to Investors of Greenhouse Gas Emission Disclosures

Cited by 346 publications

References 50 publications

Carbon Emissions by South American Companies: Driving Factors for Reporting Decisions and Emissions Reduction

Carbon Emissions by South American Companies: Driving Factors for Reporting Decisions and Emissions Reduction

Corporate Carbon and Financial Performance: A Meta‐analysis

Market reactions to environmental policies: Evidence from China

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