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Emissions, Liquidity, and Institutional Ownership

Author

Listed:
  • Adrian Finke

    (University of Augsburg - Faculty of Business and Economics)

  • Julia Meyer

    (ZHAW School of Management and Law; University of Zurich - Department of Banking and Finance)

  • Martin Nerlinger

    (University of St. Gallen - School of Finance; Swiss Finance Institute)

  • Ryan Riordan

    (Ludwig-Maximilians-University Munich, Faculty of Business Administration (Munich School of Management))

  • Sebastian Utz

    (University of Augsburg - Faculty of Business and Economics)

Abstract

We examine how the introduction of standardized carbon emissions information affects equity-market liquidity and ownership. Using Trucost coverage data from 2010-2023 and a staggered difference-indifferences design, we find that first-time emissions information narrows bid-ask spreads by 2%, reduces Amihud illiquidity by 4%, and increases dollar trading volume and turnover by 4%. Institutional ownership increases by approximately 0.3 percentage points, representing roughly $30 billion in capital reallocated to newly covered firms. This ownership shift partially explains the liquidity improvement: a one-percentage-point increase in institutional ownership is associated with an additional 0.2% reduction in spreads. Liquidity gains are strongest for high-emission firms and late disclosers. Our results indicate that non-financial information, when standardized and comparable, is financially consequential: it attracts institutional capital, reduces adverse-selection costs, and enhances market efficiency.

Suggested Citation

  • Adrian Finke & Julia Meyer & Martin Nerlinger & Ryan Riordan & Sebastian Utz, 2026. "Emissions, Liquidity, and Institutional Ownership," Swiss Finance Institute Research Paper Series 26-39, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2639
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6715478
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    Keywords

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    JEL classification:

    • 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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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