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Environmental Incidents and Firm Value –International Evidence using a MultiFactor Event Study Framework

Author

Listed:
  • Lundgren, Tommy

    () (Centre of Environmental and Resource Economics)

  • Olsson, Rickard

    (Umeå School of Business)

Abstract

Event study methodology is used to analyze whether bad news in the form of environmental (EV) incidents affect firm value negatively. An international sample of firms with EV incidents is studied. It is found that EV incidents are generally associated with loss of value. For European firms the loss is statistically significant and the magnitude of the abnormal returns should be of economic significance to corporations and investors. The results are not sensitive to multiple variations in methodology, including the use of international versions of the market model as well as of multi-factor models of the Fama-French type. Results are also robust to different parametric and non-parametric test statistics.

Suggested Citation

  • Lundgren, Tommy & Olsson, Rickard, 2010. "Environmental Incidents and Firm Value –International Evidence using a MultiFactor Event Study Framework," CERE Working Papers 2010:3, CERE - the Center for Environmental and Resource Economics.
  • Handle: RePEc:hhs:slucer:2010_003
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    File URL: http://www.cere.se/documents/wp/CERE_2010_3.pdf
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    References listed on IDEAS

    as
    1. Asgharian, Hossein & Hansson, Bjorn, 2003. "The explanatory role of factor portfolios for industries exposed to foreign competition: evidence from the Swedish stock market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 13(4), pages 325-353, October.
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    Cited by:

    1. Jan Endrikat, 2016. "Market Reactions to Corporate Environmental Performance Related Events: A Meta-analytic Consolidation of the Empirical Evidence," Journal of Business Ethics, Springer, vol. 138(3), pages 535-548, October.

    More about this item

    Keywords

    multi-country-multi-factor event study; environmental incidents; abnormal returns;

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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