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Does investors’ valuation of corporate environmental activities vary between developed and emerging market firms?

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  • Biktimirov, Ernest N.
  • Afego, Pyemo N.

Abstract

We compare the market reactions of developed and emerging market firms to reconstitutions of the FTSE Environmental Opportunities (FTSE EO) index. Our primary finding is that developed market firms that were added to or deleted from the FTSE EO experience significant increases in stock prices and trading volumes even after controlling for institutional ownership and size effects. In contrast, emerging market firms experience declines in both stock prices and trading volumes.

Suggested Citation

  • Biktimirov, Ernest N. & Afego, Pyemo N., 2022. "Does investors’ valuation of corporate environmental activities vary between developed and emerging market firms?," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321004931
    DOI: 10.1016/j.frl.2021.102528
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    More about this item

    Keywords

    Environmental sustainability; FTSE EO; Event study; Abnormal return; Trading volume; Institutional ownership;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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