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The financial consequences of abolishing a carbon trading system

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Listed:
  • Vikash Ramiah
  • Huy Nguyen Anh Pham
  • Ian Wang
  • Van Ngoc Tuong Dang
  • Jose Francisco Veron
  • Hung Duong

Abstract

We investigate the impact of 61 announcements of environmental regulations on the equities listed on the Australian Stock Exchange over the period 2009–2015. In particular, our study focuses on how the stock market reacts to announcements of the abolishment of carbon trading/pricing system. Using event study methodology, we assess whether these announcements create or destroy wealth of equity investors. Furthermore, we estimate changes in systematic risk following the announcements. In general, we find that the abolishment of the carbon pricing system has a positive effect on 18 sectors and the process of removing the carbon pricing system appears to affect the systematic risk of businesses leading to diamond risk structures. We also document negative reactions of polluting sectors to the announcements of green policies.

Suggested Citation

  • Vikash Ramiah & Huy Nguyen Anh Pham & Ian Wang & Van Ngoc Tuong Dang & Jose Francisco Veron & Hung Duong, 2017. "The financial consequences of abolishing a carbon trading system," Applied Economics Letters, Taylor & Francis Journals, vol. 24(13), pages 936-939, July.
    • Handle: RePEc:taf:apeclt:v:24:y:2017:i:13:p:936-939
    DOI: 10.1080/13504851.2016.1243201
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    Cited by:

    1. Ding, Hongliang & Sze, N.N. & Li, Haojie & Guo, Yanyong, 2021. "Affected area and residual period of London Congestion Charging scheme on road safety," Transport Policy, Elsevier, vol. 100(C), pages 120-128.
    2. Han, Jianlei & Linnenluecke, Martina K. & Pan, Zheyao (Terry) & Smith, Tom, 2019. "The wealth effects of the announcement of the Australian carbon pricing scheme," Pacific-Basin Finance Journal, Elsevier, vol. 53(C), pages 399-409.

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