Krüger, Philipp. “Climate Change and Firm Valuation: Evidence from a Quasi-Natural Experiment.” Working paper (Swiss Finance Institute Research Paper No. 15-40), 2015.
Author's abstract: "In this article, I estimate the effect of mandatory greenhouse gas (GHG) emissions disclosure on corporate value. Using the introduction of mandatory GHG emissions disclosure requirements forms listed on the Main Market of the London Stock Exchange as a source of exogenous variation in disclosure policies, I find that firms most heavily affected by the new regulation experience significantly positive valuation effects. Consistent with the notion that climate change is more relevant to larger firms and to firms belonging to carbon-intensive industries, the effect is strongest for the largest firms and for firms operating in the oil and gas and basic materials industries. Overall, the evidence shows that investors value increased transparency regarding corporate climate change risks positively. The results have important implications for security markets regulation in other jurisdictions, e.g., the United States."
LK comment: Strong paper. Won the 2015 Moskowitz Prize.