Document Type

Article

Disciplines

1.5 EARTH AND RELATED ENVIRONMENTAL SCIENCES, Environmental sciences, 5.2 ECONOMICS AND BUSINESS

Publication Details

https://www.tandfonline.com/doi/full/10.1080/1351847X.2023.2204195

Lynch, B. & O'Hagan-Luff. (2023). Finally, it seems to be working – the evolving valuation effect of the European Union’s emissions trading system. The European Journal of Finance.

https://doi.org/10.1080/1351847X.2023.2204195

Abstract

This research examines the market reaction to the publication of firm-specific environmental news for participating firms in the European Union’s Emissions Trading System (EU ETS) during its third phase. Our sample of 123 publicly listed participating firms, located in 21 European countries, accounted for 45.43% of emissions in the EU ETS in 2020. Using an event study methodology during the period 2014–2021, we find that positive news was rewarded with increased returns for publication events related to the latter years of the phase (2017–2020) while it had an insignificant impact for earlier year (2013–2016). This indicates that the EU ETS is finally fulfilling its intended function of incentivising participating firms to reduce their emissions. Our study highlights the contextually contingent nature of the relationship between environmental and financial performance.

DOI

https://doi.org/10.1080/1351847X.2023.2204195

Funder

This research received no external funding

Creative Commons License

Creative Commons Attribution-Share Alike 4.0 International License
This work is licensed under a Creative Commons Attribution-Share Alike 4.0 International License.

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