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Stock Market Reactions to COP26 and Climate Change Exposures of Indian Firms

Author

Listed:
  • Saumitra N Bhaduri

    (Madras School of Economics, Gandhi Mandapam Road, Behind Government Data Centre, Kotturpuram, Chennai, 600025, India.)

  • Ekta Selarka

    ((Corresponding author), Madras School of Economics, Gandhi Mandapam Road, Behind Government Data Centre, Kotturpuram, Chennai, 600025)

  • Alankrti Aggrwal

    (Madras School of Economics, Gandhi Mandapam Road, Behind Government Data Centre, Kotturpuram, Chennai, 600025)

Abstract

The paper examines the market reaction to the climate policy announcement (COP26) for the Indian listed firms using a novel measure of firm-specific exposure to climate-change developed by Sautner et al. (2023). The findings suggest that, while the overall market reaction is negative, firms with higher climate change exposure experience a significantly muted negative response. In contrast to the prevailing assumption that investors in emerging markets predominantly price exposure to risk, the findings indicate that firms engaging in proactive climate risk management receive favorable response.

Suggested Citation

  • Saumitra N Bhaduri & Ekta Selarka & Alankrti Aggrwal, 2026. "Stock Market Reactions to COP26 and Climate Change Exposures of Indian Firms," Working Papers 2026-294, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2026-294
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    References listed on IDEAS

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    5. Po‐Hsuan Hsu & Kai Li & Chi‐Yang Tsou, 2023. "The Pollution Premium," Journal of Finance, American Finance Association, vol. 78(3), pages 1343-1392, June.
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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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