The value relevance of carbon emissions, carbon risk disclosure and reported carbon risk exposure
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2019-08-19
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en
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Abstract
Research has analyzed the impact of carbon emissions on firm value, however there is virtually no evidence on what the role of carbon risk disclosure is. This study analyses the role of carbon risk disclosure by using multiple regression models and the data of 1422 companies located in Europe and in the United States. In line with the dominant strand of research, this study finds that carbon emissions negatively affect firm value. Additionally, the results show that the simple act of responding to the CDP does not affect firm value and neither does it moderate the impact of carbon emissions. This study shows that the impact that carbon risk disclosure has depends on the content of the disclosure. The results show that reporting carbon risk exposure positively impacts firm value and that the effect of carbon emissions on firm value is weakened by reporting carbon risk exposure. The disclosure of carbon risk exposure increases the confidence of investors that the firm is capable of handling the impact of carbon emissions effectively. Further analysis shows that country differences are important when looking at the impact of carbon emissions and carbon risk disclosure.
Keywords: Carbon risk disclosure; Carbon emissions; Environmental performance; Reported carbon risk exposure; Firm valuation, Voluntary risk disclosure
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Faculteit der Managementwetenschappen