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| dc.title | Environmental Damage News and Stock Returns: Evidence from Latin America |
| dc.contributor.author | Cavallo, Eduardo A. |
| dc.contributor.author | Cepeda, Ana |
| dc.contributor.author | Panizza, Ugo |
| dc.contributor.orgunit | Department of Research and Chief Economist |
| dc.coverage | Latin America |
| dc.date.available | 2024-05-09T00:05:00 |
| dc.date.issue | 2024-05-09T00:05:00 |
| dc.description.abstract | This paper studies the interplay between environmental performance and financial valuation of firms in Latin America and the Caribbean. We provide insights into how environmental considerations are integrated into financial decision-making and investor behavior by analyzing the stock market reaction to environmental news of firms with different levels of carbon emission intensity. We find that high emission intensity firms tend to underperform after the release of environmental damage news. Our baseline estimates indicate that, after the release of such news, firms at the 75th percentile of the distribution of emission intensity experience stock returns that are 17% lower than those of firms at the 25th percentile of the distribution of emission intensity. These results suggest that investors care about and price carbon risk, but only when this risk is salient. |
| dc.format.extent | 41 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0012962 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/Environmental-Damage-News-and-Stock-Returns-Evidence-from-Latin-America.pdf |
| dc.language.iso | en |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Small Business |
| dc.subject | Decarbonization |
| dc.subject | Climate Change |
| dc.subject | Negotiable Instrument |
| dc.subject.jelcode | G12 - Asset Pricing • Trading Volume • Bond Interest Rates |
| dc.subject.jelcode | G14 - Information and Market Efficiency • Event Studies • Insider Trading |
| dc.subject.jelcode | G18 - Government Policy and Regulation |
| dc.subject.jelcode | G32 - Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill |
| dc.subject.jelcode | G38 - Government Policy and Regulation |
| dc.subject.jelcode | Q54 - Climate • Natural Disasters and Their Management • Global Warming |
| dc.subject.keywords | Carbon emissions;climate change;Environmental news;Stock returns |
| dc.type | Working Papers |
| idb.identifier.pubnumber | IDB-WP-01593 |
| idb.operation | RG-K1098 |