Carbon Management Practices And Firm Value

The purpose of this thesis is to investigate the association between carbon management practices(i.e.,carbon targets,external carbon assurance and carbon communication)and market value of equity.This thesis respond to the recent calls to investigate the value relevance of firms' proactivity in adopting carbon management activities.However,this research also aims to contribute to the theoretical debate on the economic consequences of environmental practices,where point of disagreement is the cost related to environmental initiatives.This research has explored these theoretical and empirical phenomena by drafting three different essays.First essay of the thesis explores the value relevance of carbon targets,external carbon assurance and carbon communication,using a sample from S&P 500 companies from the year 2011 – 2018.This study finds that investors value carbon communication more than carbon targets and carbon assurance.These results are consistent with the argument that equity-investors finds carbon information useful and use that disclosure for their investment decisions.Moreover,this study is theoretically consistent with the argument that costs relating to carbon-related initiatives are investment expenditures which enhance a firm's competitiveness and firm value.The second essay of the research examines the effect of external carbon assurance on the firm value of carbon information disclosure in the U.S.context.The results of this research reveals that stockholders find carbon information useful in the long term.Moreover,this research finds that external carbon assurance further increases the firm value of carbon information disclosure.The third essay of the study investigates the mitigating effect of internal carbon pricing on the association between carbon emission intensity and firm value.Internal carbon pricing tends to show the firm's proactivity in reducing carbon emissions.This research finds that emissions intensity is negatively associated with market value.The findings of the study also identify that internal carbon pricing help firms to reduce the negative impact of carbon emissions on firm value.This research signifies the economic benefits of the firm's proactivity.Furthermore,the results of this thesis are relevant for managers,investors and regulators.The regulators may find the findings of the study useful in understanding the role of carbon information in the stock market,which will help them in designing future regulatory regimes on climate change.Similarly,the value relevance of carbon management practices provides evidence for managers that investors recognise corporate efforts to reduce carbon emissions.