Putting oil and gas in CARs: the impact of climate policy events on stock performance
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2025-07-04
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en
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This thesis investigates how climate policy events impact the financial performance of the oil and gas industry in Western markets: the US, Canada, Europe, Australia and Japan. Using a multi-event study methodology approach using a CAR, BHAR and pooled OLS regressions analysis, the short- and medium-term impacts of several international, national and political events on the stock return performance of the oil and gas industry is examined. The findings report that international global climate policy commitments such as the Paris Agreement, COP26 and COP28 lead to sustained negative abnormal returns, especially in the US oil and gas industry. National policies show more diverse results, only the EU Fit for 55 Package induced a strong and consistent negative market response. The Inflation Reduction Act showed and the EU Green Deal showed more moderate effects, indicating that these events were already anticipated by investors. Political events also showed notable results; the Trump elections showed reasonable positive results in the shorter windows, although this effect was reversed in the longer windows. Conversely, Bidens’ elections showed a strong negative reaction in the oil and gas industry globally. Furthermore, the analysis demonstrates that in line with comparative institutional theory, firms located in regions with stronger and more credible institutional framework are more impacted by climate policy shocks than those without. Notably, higher ESG ratings correlated slightly with more with negative abnormal returns, challenging mainstream expectations. Finally, these results suggest that oil and gas stocks could act as partial hedges in times of broader market uncertainty. These findings contribute to the literature on climate finance by highlighting the varying market reactions to climate policy across different institutional environments and displaying the interplay between regulatory credibility, firm characteristics, and investor sentiment.
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Faculteit der Managementwetenschappen