Going Green: Market Reaction to CSR Newswire Releases
Paul A. Griffin, UC Davis, and Yuan Sun, UC Berkeley
January 29, 2012
A new study conducted by Paul Griffin of UC Davis and Yuan Sun of UC Berkeley shows that greenhouse gas emissions and carbon-reduction strategy reporting can lift a company's economic value.
Companies currently report most of their greenhouse gas, carbon, and CO2 emissions information to interested parties voluntarily, either directly or through various non-governmental channels (although the public will soon have access to standardized carbon emissions data collected by the US Environmental Protection Agency and the California Air Resources Board).
The researchers analyzed ten years of voluntary news releases, tracking disclosures and subsequent market responses for 84 companies that released their emissions information via Corporate Social Responsibility Newswire. They found that stock prices jumped approximately one-half a percent over five days, with smaller companies seeing a bigger boost of just over 2 percent. Using a matched control sample set, no statistical change in stock price was detected for companies that did not disclose carbon information.
The study concludes that voluntary green disclosure decisions produce positive returns to shareholders, and that shareholders of smaller companies with limited public information availability benefit the most from voluntary green disclosure, since in this setting investors have less access to competing information.