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Does carbon neutrality commitment enhance firm value?

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  • Xinyi Xie
  • Jianan Lu
  • Mao Li
  • Jiang Dai

Abstract

This study discusses the stock market reaction to the firm’s carbon neutrality commitments. By hand-collecting firm-level news and stock data, we conduct event studies as well as regression modelling studies. The results show that firms experience losses in market value from committing to being carbon neutral, and the decline in cumulative abnormal returns ranges from −2.09% to −1.21% across different event windows. However, we find better previous ESG performance and a higher level of carbon disclosure could mitigate adverse market reactions. This study innovatively links the ‘trade-off theory’ and ‘resource-based view’ to the discussion of CSR/ESG on firm value from the lens of carbon neutrality commitments.

Suggested Citation

  • Xinyi Xie & Jianan Lu & Mao Li & Jiang Dai, 2023. "Does carbon neutrality commitment enhance firm value?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 21(1), pages 49-83, January.
    • Handle: RePEc:taf:jocebs:v:21:y:2023:i:1:p:49-83
    DOI: 10.1080/14765284.2022.2161171
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    Cited by:

    1. Wang, Hanjie & Yu, Xiaohua, 2023. "Carbon dioxide emission typology and policy implications: Evidence from machine learning," China Economic Review, Elsevier, vol. 78(C).

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