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Corporate carbon emissions and market valuation of organic and inorganic investments

Author

Listed:
  • Adamolekun, Gbenga
  • Kwansa, Nana Abena
  • Kwabi, Frank

Abstract

We empirically examine the impact of a firm’s carbon emissions level on the market valuation of organic and inorganic investments. We document that the market reacts negatively to corporate investment announcements by companies with high carbon emissions levels. Further analysis indicates that the discount on market valuation is more pronounced for the set of organic investments, within which only asset acquisitions and product launches are negatively affected by the high carbon emissions level at the announcement.

Suggested Citation

  • Adamolekun, Gbenga & Kwansa, Nana Abena & Kwabi, Frank, 2022. "Corporate carbon emissions and market valuation of organic and inorganic investments," Economics Letters, Elsevier, vol. 221(C).
    • Handle: RePEc:eee:ecolet:v:221:y:2022:i:c:s0165176522003615
    DOI: 10.1016/j.econlet.2022.110887
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    References listed on IDEAS

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    More about this item

    Keywords

    Carbon emissions; Market valuation; Organic investments announcements; Inorganic investment announcements;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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