Greenhouse Gas Emissions Mitigation and Firm Value: A Study of Large North-American and European Firms

38 Pages Posted: 18 Sep 2011

See all articles by Raj Aggarwal

Raj Aggarwal

University of Akron; Federal Reserve Banks - Federal Reserve Bank of Cleveland; Kent State University; Kent State University Foundation

Sandra Dow

Monterey Institute of International Studies

Date Written: September 17, 2011

Abstract

There is strong public pressure globally to mitigate GHG emissions even though regulatory requirements for GHG mitigation vary greatly among countries. However, research on the influence of GHG emissions mitigation on firm value has been inconclusive. This paper contributes by examining the impact of GHG emissions on firm value for a sample of over 600 large firms from the US, Canada, and Europe. We find that GHG emissions have a negative influence on firm value. However, we cannot document that GHG emission mitigation actions add to firm value. The value maximizing nature of such actions seems to be moderated by the nature and quality of corporate governance in a firm perhaps especially as absent any industry-wide regulatory requirements there is no direct link between such GHG mitigating actions and shareholder wealth maximization.

Keywords: governance, environment, strategy

JEL Classification: G30, G34, Q54

Suggested Citation

Aggarwal, Raj and Dow, Sandra, Greenhouse Gas Emissions Mitigation and Firm Value: A Study of Large North-American and European Firms (September 17, 2011). Midwest Finance Association 2012 Annual Meetings Paper, Available at SSRN: https://ssrn.com/abstract=1929453 or http://dx.doi.org/10.2139/ssrn.1929453

Raj Aggarwal

University of Akron ( email )

Akron, OH 44325-4803
United States

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Kent State University ( email )

College of Business Administration
Kent, OH 44242-0001
United States

Kent State University Foundation ( email )

Akron, OH 44325-4803
United States

Sandra Dow (Contact Author)

Monterey Institute of International Studies ( email )

460 Pierce Street
Monterey, CA 93940
United States

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