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Market valuation of greenhouse gas emissions under a mandatory reporting regime: Evidence from the UK
Institution:1. University of Roehampton, London, UK;2. University of Sussex, Brighton, UK;1. Department of Accounting and Finance, Faculty of Business and Law, De Montfort University, Leicester LE1 9BH, UK;2. Department of Accounting, Economics and Finance, Faculty of Business and Law, University of West England, Bristol BS16 1QY, UK;1. Universität Hamburg, Centre for Earth System Research and Sustainability, Centre for Globalisation and Governance, Grindelberg 5, 20144 Hamburg, Germany;2. Universität Hamburg, Sekretariat Prof. Dr. Anita Engels, Faculty of Business, Economics and Social Sciences, Institute of Sociology, Allende-Platz 1, 20146 Hamburg, Germany;1. Centre for Sustainability Governance, School of Commerce, University of South Australia Business School, GPO Box 2471, Adelaide, SA 5001, Australia;2. Centre for Sustainability Management (CSM), Leuphana University Lüneburg, Scharnhorststr. 1, D-21335 Lüneburg, Germany
Abstract:This study provides evidence on the potential benefits of mandatory environmental reporting for listed firms’ market valuation. It takes advantage of recent regulation that requires all listed firms in the UK to report their annual greenhouse gas (GHG) emissions in their annual reports and shows that the magnitude of the negative association between GHG emissions and the market value of listed firms decreased after the introduction of the reporting regulation. This decline is attributed to regulation forestalling shareholders’ negative reflexive reaction toward firms’ carbon disclosures, as proposed by the theoretical work of Unerman and O’Dwyer (2007).
Keywords:Greenhouse gas emissions  Value relevance  London Stock Exchange  Mandatory disclosures  Reporting regulation
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