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Do investors find carbon information useful? Evidence from Italian firms

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Listed:
  • Bikki Jaggi

    (Rutgers University)

  • Alessandra Allini

    (University of Naples Federico II)

  • Riccardo Macchioni

    (Campania University L. Vanvitelli)

  • Annamaria Zampella

    (University of Naples Federico II)

Abstract

The usefulness of carbon disclosures has been questioned in the literature because they do not truly reflect firm’s carbon performance, suggesting that they may not be useful for risk evaluation and investment decisions. This study empirically tests the usefulness of carbon information voluntarily disclosed by the Italian firms. Our results based on the price model show that there is a positive association between the stock price and carbon disclosures, suggesting that investors find carbon information useful for their investment decisions. We find similar results based on the market valuation model. Additionally, the results reveal that the positive association is especially strong for firms that have established environmental committees on a voluntary basis and also for firms from the highly polluting industries defined by the EU_ETS program, confirming that investors’ positive response is especially strong to carbon disclosures by firms from the highly polluting industries. We also find that the market reacts positively to carbon disclosures by firms with a higher percentage of independent directors on their corporate boards, but the positive association is marginally significant.

Suggested Citation

  • Bikki Jaggi & Alessandra Allini & Riccardo Macchioni & Annamaria Zampella, 2018. "Do investors find carbon information useful? Evidence from Italian firms," Review of Quantitative Finance and Accounting, Springer, vol. 50(4), pages 1031-1056, May.
    • Handle: RePEc:kap:rqfnac:v:50:y:2018:i:4:d:10.1007_s11156-017-0653-x
    DOI: 10.1007/s11156-017-0653-x
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    3. Patrick Velte & Martin Stawinoga, 2020. "Do chief sustainability officers and CSR committees influence CSR-related outcomes? A structured literature review based on empirical-quantitative research findings," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(4), pages 333-377, December.
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    6. Helfaya, Akrum & Aboud, Ahmed & Amin, Essam, 2023. "An examination of corporate environmental goals disclosure, sustainability performance and firm value – An Egyptian evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 52(C).
    7. Mohammed S. Albarrak & Ngan Duong Cao & Aly Salama & Abdullah A. Aljughaiman, 2023. "Twitter carbon information and cost of equity: the moderating role of environmental performance," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 693-718, September.
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    More about this item

    Keywords

    Carbon disclosures; Environmental committees; Corporate board independence; Carbon disclosure indexes; Highly polluting industries;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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