Investigating the effects of emission disclosure on stock liquidity
Keywords
Loading...
Authors
Issue Date
2022-08-29
Language
en
Document type
Journal Title
Journal ISSN
Volume Title
Publisher
Title
ISSN
Volume
Issue
Startpage
Endpage
DOI
Abstract
This study investigates the effects of GHG emissions and common firm-level practices to reduce emissions on firms’ liquidity on a sample of 350 European companies. A novelty of this paper is its application of both emissions and firm-level initiatives, which leads to a deeper understanding on the salience of emissions metrics for stock liquidity. We apply a panel data fixed-effects model on a sample ranging from 2011 to 2020 and significant results while factoring in omitted variable bias. The principal finding is that firms with high levels of total emissions are associated with higher liquidity. Moreover, the most common measures of emissions performance—GHG intensity and change in emissions—are not related to the stock liquidity. Further analyses suggest that emissions reduction policy provides benefits in terms of more liquid stocks, while emissions trading participation does not. The findings of our study have implications for investors to assess the riskiness of an investment, the firms to obtain more liquidity from equity markets, and the policymakers to increase overall liquidity in stock markets.
Description
Citation
Supervisor
Faculty
Faculteit der Managementwetenschappen