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The financial performance of firms participating in the EU Emissions Trading Scheme Energy Policy

Author

Listed:
  • Georgia Makridou

    (ESCP Europe - Ecole Supérieure de Commerce de Paris)

  • Michael Doumpos

    (TUC - Technical University of Crete [Chania])

  • Emilios Galariotis

    (Audencia Business School)

Abstract

This study analyses the profitability of firms participating in the European Union Emissions Trading Scheme during the period from 2006 to 2014, covering the three phases of the scheme. The analysis covers a large dataset from 19 European Union countries and with five different modelling specifications. The examined models use firm-specific attributes, country-level data about the economic environment and energy-related characteristics. In particular, the influences of time/firm/country characteristics on profitability are examined by performing cross-classified multilevel modelling. The empirical results show that both economic and energy-related variables significantly influence firms' profitability. Measures such as reducing environmental impacts (verified emissions and allowances allocated) or increasing energy efficiency should be taken into consideration in decision-making for the firm's profitability improvement.

Suggested Citation

  • Georgia Makridou & Michael Doumpos & Emilios Galariotis, 2019. "The financial performance of firms participating in the EU Emissions Trading Scheme Energy Policy," Post-Print hal-02013153, HAL.
    • Handle: RePEc:hal:journl:hal-02013153
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    Citations

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    Cited by:

    1. Francisco Porles-Ochoa & Ruben Guevara, 2023. "Moderation of Clean Energy Innovation in the Relationship between the Carbon Footprint and Profits in CO₂e-Intensive Firms: A Quantitative Longitudinal Study," Sustainability, MDPI, vol. 15(13), pages 1-19, June.
    2. Xiangjun Chen & Bo Yan, 2024. "Research on jumps and volatility in China’s carbon market," Economic Change and Restructuring, Springer, vol. 57(1), pages 1-43, February.
    3. Maria Elisabete Neves & Carla Henriques & João Vilas, 2021. "Financial performance assessment of electricity companies: evidence from Portugal," Operational Research, Springer, vol. 21(4), pages 2809-2857, December.
    4. Matteo Mazzarano, 2024. "Financial markets implications of the energy transition: carbon content of energy use in listed companies," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-20, December.
    5. Sheng Xu & Wenran Pan & Demei Wen, 2023. "Do Carbon Emission Trading Schemes Promote the Green Transition of Enterprises? Evidence from China," Sustainability, MDPI, vol. 15(8), pages 1-28, April.
    6. Jin, Jiayu & Han, Liyan & Wu, Lei & Zeng, Hongchao, 2020. "The hedging effect of green bonds on carbon market risk," International Review of Financial Analysis, Elsevier, vol. 71(C).
    7. Liliana Nicoleta Simionescu & Ștefan Cristian Gherghina & Ziad Sheikha & Hiba Tawil, 2020. "Does Water, Waste, and Energy Consumption Influence Firm Performance? Panel Data Evidence from S&P 500 Information Technology Sector," IJERPH, MDPI, vol. 17(14), pages 1-31, July.
    8. Liu, Jing-Yue & Zhang, Yue-Jun, 2021. "Has carbon emissions trading system promoted non-fossil energy development in China?," Applied Energy, Elsevier, vol. 302(C).
    9. Jialu Ma & Jeffrey Kuo, 2021. "Environmental self‐regulation for sustainable development: Can internal carbon pricing enhance financial performance?," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3517-3527, December.
    10. Li, Minghui & Liu, Chong & Shen, Chaohai, 2020. "Does cheap electricity in a target's location add value to the acquirer? Evidence from China," Energy Policy, Elsevier, vol. 145(C).
    11. Wei, Yigang & Gong, Ping & Zhang, Jianhong & Wang, Li, 2021. "Exploring public opinions on climate change policy in "Big Data Era"—A case study of the European Union Emission Trading System (EU-ETS) based on Twitter," Energy Policy, Elsevier, vol. 158(C).
    12. Kim, Sang Joon & Atukeren, Erdal & Kim, Hohyun, 2023. "Does the market's reaction to greenhouse gas emissions differ between B2B and B2C? Evidence from South Korea," Finance Research Letters, Elsevier, vol. 53(C).
    13. Nong, Duy, 2020. "Development of the electricity-environmental policy CGE model (GTAP-E-PowerS): A case of the carbon tax in South Africa," Energy Policy, Elsevier, vol. 140(C).
    14. Demiralay, Sercan & Gencer, Hatice Gaye & Bayraci, Selcuk, 2022. "Carbon credit futures as an emerging asset: Hedging, diversification and downside risks," Energy Economics, Elsevier, vol. 113(C).

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