Investor Rewards to Climate Responsibility: Evidence from the 2016 Climate Policy Shock

Ramelli, Stefano; Zeckhauser, Richard; Ziegler, Alexandre

doi:10.3386/w25310

Cited by 29 publications

(15 citation statements)

References 37 publications

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“…Engle, Giglio, Kelly, Lee, and Stroebel (2020) build a climate change risk proxy using the Wall Street Journal news articles to hedge climate change risk with the mimicking portfolio approach. Ramelli, Wagner, Zeckhauser, and Ziegler (2018) study firms' stock-price reactions and institutional investors' portfolio adjustments at the election of Donald Trump and the nomination of Scott Pruitt as the head of the Environmental Protection Agency, both climate skeptics. Bertolotti, Basu, Akallal, and Deese (2019) analyze the impact of extreme weather events on US electric utilities' stock prices.…”

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confidence: 99%

Climate Change Concerns and the Performance of Green Versus Brown Stocks

et al. 2020

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We empirically test the prediction of Pastor, Stambaugh, and Taylor 2020 that green firms can outperform brown firms when climate change concerns strengthen unexpectedly for S&P 500 companies over the period January 2010 -June 2018. To capture unexpected increases in climate change concerns, we construct a Media Climate Change Concern index using climate change-related news published by major U.S. newspapers. We find a negative relationship between the firms' exposure to the Media Climate Change Concerns index and the level of the firm's greenhouse gas emission per unit of revenue. This result implies that when concerns about climate change rise unexpectedly, green firms' stock price increases, while brown firms' stock price decreases. Further, using topic modeling, we analyze which type of climate change news drives this relationship. We identify five themes that have an effect on green vs. brown stock returns. Some of those themes can be related to change in investors' expectations about the future cash-flow of green vs. brown firms, while others cannot. This result implies that the relationship between concern and green vs. brown stock returns arises from both investors updating their expectations about the future cash-flows of green and brown firms and changes in investors' sustainability taste.

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confidence: 99%

Climate Change Concerns and the Performance of Green Versus Brown Stocks

et al. 2020

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“…Chava (2014) and Matsumura, Prakash, and Vera-Muñoz (2014) find that financial markets penalize firms with more negative environmental externalities. 3 The firm-value price of carbon emissions, however, is also known to be influenced by various factors, including the saliency of extreme weather events (e.g., Choi, Gao, andJiang, 2019, Pankratz, Bauer, andDerwall, 2019) and the political uncertainty surrounding environmental regulation (e.g., Ilhan, Sautner, andVilkov, 2019 andRamelli, Wagner, Zeckhauser, andZiegler, 2019). Our paper contributes to this debate by providing novel evidence that the markets' pricing of carbon intensity reacts to environmental activism.…”

Section: Introductionmentioning

confidence: 88%

Climate Sin Stocks: Stock Price Reactions to Global Climate Strikes

2020

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This publication is a Technical report by the Joint Research Centre (JRC), the European Commission's science and knowledge service. It aims to provide evidence-based scientific support to the European policymaking process. The scientific output expressed does not imply a policy position of the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use that might be made of this publication.

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“…In this section, we analyze the effect on firm penalties after a connected politician loses office. Ramelli et al (2019) find that when Donald Trump was elected, carbon-intensive firms benefitted, although investors also rewarded firms with long-term plans in place to transition to a lowcarbon economy. They attribute the gains realized by these environmentally friendly firms as evidence that investors were expecting a "regulatory boomerang" after President Trump left office.…”

Section: Lost Connectionsmentioning

confidence: 98%

Corporate Political Connections and Favorable Environmental Regulatory Enforcement

Heitz

Wang

2023

Management Science

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We examine whether the Environmental Protection Agency (EPA) uniformly enforces the Clean Air Act for politically connected and unconnected firms using a close election setting. We find no difference in regulated pollutant emissions or EPA investigations between the two groups, although connected firms experience less regulatory enforcement and lower penalties. These results are more pronounced for firms connected to politicians capable of influencing regulatory bureaucrats and for connected firms that are more important to their supported politicians. Taken together, our results show that campaign contributions can indirectly benefit firms by way of reduced environmental regulatory enforcement and penalties. This paper was accepted by Colin Mayer for the Special Issue of Management Science: Business and Climate Change.

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Investor Rewards to Climate Responsibility: Evidence from the 2016 Climate Policy Shock

Cited by 29 publications

References 37 publications

Climate Change Concerns and the Performance of Green Versus Brown Stocks

Climate Change Concerns and the Performance of Green Versus Brown Stocks

Climate Sin Stocks: Stock Price Reactions to Global Climate Strikes

Corporate Political Connections and Favorable Environmental Regulatory Enforcement

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