Glasgow climate pact and the global clean energy index constituent stocks

Abstract

PurposeThis study examined the impact of the Glasgow Climate Pact on the abnormal returns of global clean energy stocks. Further, this study examines which country-specific and firm-specific variables drive the cumulative abnormal returns (CARs) of clean energy stocks.Design/methodology/approachThe authors used the event study method and cross-sectional multivariate regression model. The clean energy stocks in this study are limited to 81 constituent firms of the S&P Global Clean Energy Index across 17 nations. The final sample includes 80 firms and the sample period ranges from January 26, 2021, to December 07, 2021.FindingsThe study finds that the Glasgow Climate Pact negatively affects the stock returns of clean energy firms. Moreover, the climate change performance index (CCPI) positively impacts cumulative abnormal returns (CARs), signifying that clean energy investors react positively to firms in nations with good CCPI scores. The environmental, social and governance (ESG) measure for the shorter window (−1, +1) exhibited a negative relationship with CARs. The firm-specific variables (BTM, stock liquidity, size and past returns) exhibit a negative relationship with CARs in different event windows.Research limitations/implicationsThe authors use the CCPI as a proxy for the stringency of environmental policies in any nation. The authors extend the existing literature by employing firm-specific variables and supporting previous findings. Their findings have policy implications for clean energy investors, policymakers and other market participants.Practical implicationsClimate risks impact the global financial market, so the findings have implications for global regulatory bodies. Currently, there are bankruptcy cases due to climate risks. Because financial markets must play a critical role in shifting the economy toward a green one, regulators can use the cross-sectional drivers of this study to shape policy. It is also critical for regulators to reduce stock price volatility in the event of the implementation of environmental regulations and improve environmental disclosures by publicly traded companies. Furthermore, governments are interested in researching the effects of environmental regulations to protect stakeholders' interests. These regulations significantly impact emerging markets because they lack the same solid institutional frameworks as developed markets.Originality/valueThe authors provide evidence that firms with better ESG scores and larger firm sizes have experienced fewer abnormal returns, as these firms have stable financial and non-financial fundamentals. This timely study on the ongoing regulatory shift in environmental policy will help investors, policymakers, firms and other stakeholders make relevant decisions.

The impact of Credit Suisse takeover on Indian banking and financial services sector stocks: an event study analysis

“…Several recent studies have utilized event study methodology to investigate the effects of various events on different financial markets (Abbassi et al, 2023;Boubaker et al, 2015;Chortane and Pandey, 2022;Goodell and Huynh, 2020;Goyal and Soni, 2023;Jaiswal and Dubey, 2022;Kumari et al, 2023a, b;Pandey et al, 2023a;Pandey and Kumari, 2021;Rai and Kumari, 2022). Following it, the present study employed the most widely used market model of event study methodology (Buigut and Masinde, 2022;Kumari et al, 2023a, b;Pandey et al, 2023c;Pandey and Kumari, 2022) to explore the impact of the event on the Indian banking and financial services sector stocks. The timeline of the event study consists of an estimation window of 200 trading days from tÀ207 to tÀ8 and a 15-day event window (À7, þ7) (Pandey et al, 2023a) 1.…”

“…Following it, the present study employed the most widely used market model of event study methodology (Buigut and Masinde, 2022; Kumari et al. , 2023a, b; Pandey et al. , 2023c; Pandey and Kumari, 2022) to explore the impact of the event on the Indian banking and financial services sector stocks.…”

“…The study incorporates return on assets (ROA) (Abbassi et al. , 2023; Pandey et al ., 2023c; Pandey and Kumar, 2022a), current ratio (CR) (Kumari et al. , 2022), non-performing assets (NPA) (Sharma et al.…”

“…Our regression model includes various variables, including banks and financial Source(s): Author's own creation services sector-specific variables, as independent factors. The study incorporates return on assets (ROA) (Abbassi et al, 2023;Pandey et al, 2023c;Pandey and Kumar, 2022a), current ratio (CR) (Kumari et al, 2022), non-performing assets (NPA) (Sharma et al, 2022), debt-toequity ratio (DE) (Bhandari, 1988) and market capitalization (MCAP) (Boubaker et al, 2015;Pandey and Kumar, 2022a) as explanatory variables. These factors have been carefully selected to assess their impact on the observed CARs and to gain a comprehensive understanding of the stock market behavior during the specified event periods.…”

Effect of Climate Action on Renewable Energy Stock Price

“…In their final findings, Bai et al (2023) found that the green energy Sharp ratios within the CNB have their level of significance greater than other stocks in different method of allocations (Bai, et al, 2023). Pandey, et al (2023) analysed the effect of the Glasgow Climate Pact (GCP) on the stock returns of world clean energy stocks. They further examined how and if some firm-specific factors and countryrelated factors contribute to influence the aggregate stock returns of clean energy.…”