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The Impact of Climate Change Information: New Evidence from the Stock Market

Author

Listed:
  • Beatty Timothy

    () (University of Minnesota)

  • Shimshack Jay P

    () (Tulane University)

Abstract

On June 19, 2007, a non-profit organization released ratings of companies plans for measuring, reporting, and reducing their greenhouse gas emissions. We explore the capital market impacts of this information event. In contrast to much of the related literature, our study examines climate change information and a plausibly exogenous event. We find that the information had an economically important and statistically significant impact on capital market returns. Poorly rated firms suffered market penalties. In contrast, we find limited benefits for firms receiving good ratings. We also uncover suggestive evidence that the economic mechanism driving our results is not a direct consumer demand effect.

Suggested Citation

  • Beatty Timothy & Shimshack Jay P, 2010. "The Impact of Climate Change Information: New Evidence from the Stock Market," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-29, November.
  • Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:105
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    References listed on IDEAS

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    Cited by:

    1. Koch, Nicolas & Grosjean, Godefroy & Fuss, Sabine & Edenhofer, Ottmar, 2016. "Politics matters: Regulatory events as catalysts for price formation under cap-and-trade," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 121-139.
    2. Hjort, Ingrid, 2016. "Potential Climate Risks in Financial Markets: A Literature Overview," Memorandum 01/2016, Oslo University, Department of Economics.
    3. Lyon, Thomas & Lu, Yao & Shi, Xinzheng & Yin, Qie, 2013. "How do investors respond to Green Company Awards in China?," Ecological Economics, Elsevier, vol. 94(C), pages 1-8.
    4. Huang, Xuan & An, Haizhong & Fang, Wei & Gao, Xiangyun & Wang, Lijun & Sun, Xiaoqi, 2016. "Impact assessment of international anti-dumping events on synchronization and comovement of the Chinese photovoltaic stocks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 459-469.

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