The Impact of Carbon Neutrality Announcement on Stock Prices: An Empirical Study on the Nordic Countries
(2023) NEKN02 20231Department of Economics
- Abstract
- The paper aims to examine the effect of companies announcing to become carbon neutral in the Nordic countries on their stock prices. By conducting an event study approach on the four main markets of the Nordics we find that, on average, only the Oslo Stock Exchange reacts positively to these announcements. We show that a less ambitious carbon neutrality target announcement leads to yielding higher positive Cumulative Abnormal Returns. Furthermore, we conduct a difference-in-difference analysis on the Stockholm, Helsinki, and Copenhagen Stock
Exchanges using the implementation of the EU Taxonomy as the treatment. We discover that, on average, the Taxonomy seems to have a slightly positive effect on the returns of companies that have... (More) - The paper aims to examine the effect of companies announcing to become carbon neutral in the Nordic countries on their stock prices. By conducting an event study approach on the four main markets of the Nordics we find that, on average, only the Oslo Stock Exchange reacts positively to these announcements. We show that a less ambitious carbon neutrality target announcement leads to yielding higher positive Cumulative Abnormal Returns. Furthermore, we conduct a difference-in-difference analysis on the Stockholm, Helsinki, and Copenhagen Stock
Exchanges using the implementation of the EU Taxonomy as the treatment. We discover that, on average, the Taxonomy seems to have a slightly positive effect on the returns of companies that have announced their carbon neutrality targets before its implementation. Nonetheless, the model does not have great significance power and limitations have to be addressed before concluding that investors have a more positive reaction towards companies announcing environmental commitments. This study contributes to the literature by being the first one analysing carbon neutrality announcements in the Nordic countries as well as conducting a difference-in-differences study on the topic. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9120374
- author
- Boilini, Ambra LU and Lehto, Jonna LU
- supervisor
- organization
- course
- NEKN02 20231
- year
- 2023
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Carbon Neutrality, Announcement Effects, EU Taxonomy, Cumulative Abnormal Returns, Corporate Sustainability, Climate Change, Nordic Stock Markets, Nordic Countries, Environmental Commitments, Event Study, Difference-in-Differences
- language
- English
- id
- 9120374
- date added to LUP
- 2023-11-24 08:56:31
- date last changed
- 2023-11-24 08:56:31
@misc{9120374, abstract = {{The paper aims to examine the effect of companies announcing to become carbon neutral in the Nordic countries on their stock prices. By conducting an event study approach on the four main markets of the Nordics we find that, on average, only the Oslo Stock Exchange reacts positively to these announcements. We show that a less ambitious carbon neutrality target announcement leads to yielding higher positive Cumulative Abnormal Returns. Furthermore, we conduct a difference-in-difference analysis on the Stockholm, Helsinki, and Copenhagen Stock Exchanges using the implementation of the EU Taxonomy as the treatment. We discover that, on average, the Taxonomy seems to have a slightly positive effect on the returns of companies that have announced their carbon neutrality targets before its implementation. Nonetheless, the model does not have great significance power and limitations have to be addressed before concluding that investors have a more positive reaction towards companies announcing environmental commitments. This study contributes to the literature by being the first one analysing carbon neutrality announcements in the Nordic countries as well as conducting a difference-in-differences study on the topic.}}, author = {{Boilini, Ambra and Lehto, Jonna}}, language = {{eng}}, note = {{Student Paper}}, title = {{The Impact of Carbon Neutrality Announcement on Stock Prices: An Empirical Study on the Nordic Countries}}, year = {{2023}}, }