Corporate carbon emissions and market valuation of organic and inorganic investments

Gbenga Adamolekun; Nana Abena Kwansa; Frank Kwabi

doi:10.1016/j.econlet.2022.110887

Corporate carbon emissions and market valuation of organic and inorganic investments

Gbenga Adamolekun, Nana Abena Kwansa, Frank Kwabi

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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.

Original language	English
Article number	110887
Journal	Economics Letters
Volume	221
Early online date	14 Oct 2022
DOIs	https://doi.org/10.1016/j.econlet.2022.110887
Publication status	Published - Dec 2022

Keywords

Carbon emissions
Inorganic investment announcements
Market valuation
Organic investments announcements

ASJC Scopus subject areas

Finance
Economics and Econometrics

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title = "Corporate carbon emissions and market valuation of organic and inorganic investments",

abstract = "We empirically examine the impact of a firm{\textquoteright}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.",

keywords = "Carbon emissions, Inorganic investment announcements, Market valuation, Organic investments announcements",

author = "Gbenga Adamolekun and Kwansa, {Nana Abena} and Frank Kwabi",

note = "Funding Information: We thank the Editor, Mariano Massimiliano Croce, Paul Langford and an anonymous referee for their comments. Publisher Copyright: {\textcopyright} 2022 The Author(s)",

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AU - Adamolekun, Gbenga

AU - Kwansa, Nana Abena

AU - Kwabi, Frank

PY - 2022/12

Y1 - 2022/12

N2 - 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.

AB - 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.

KW - Carbon emissions

KW - Inorganic investment announcements

KW - Market valuation

KW - Organic investments announcements

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U2 - 10.1016/j.econlet.2022.110887

DO - 10.1016/j.econlet.2022.110887

M3 - Article

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VL - 221

JO - Economics Letters

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Corporate carbon emissions and market valuation of organic and inorganic investments

Abstract

Keywords

ASJC Scopus subject areas

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