Voluntary Environmental Regulation and Firm Performance: The Chicago Climate Exchange

This article examines stock return and financial performance of firms that voluntarily participated in the Chicago Climate Exchange's emissions-reduction program. Findings reveal that the stock price of firms joining the program increased by a small, statistically significant amount during the...

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Bibliographic Details
Published in:The journal of alternative investments 2013-12, Vol.15 (3), p.114-122
Main Authors: Boulatoff, Catherine, Boyer, Carol, Ciccone, Stephen J.
Format: Article
Language:English
Subjects:
Climate change
Costs
Emissions control
Emissions trading
Environmental policy
Environmental quality
Environmental regulations
Equity
Financial performance
Greenhouse gases
Investments
New stock market listings
Participation
Regulation
Social responsibility
Stock exchanges
Stock prices
Studies
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Summary:This article examines stock return and financial performance of firms that voluntarily participated in the Chicago Climate Exchange's emissions-reduction program. Findings reveal that the stock price of firms joining the program increased by a small, statistically significant amount during the announcement period. Stocks overperformed by about 8% during the first year after the announcement. Financial performance of participating firms also improved compared to a matched sample of non-participating firms. Results support the hypothesis that sustainable business practices provide quantifiable benefits to participating corporations and do no harm to the financial status of the firm, while potentially improving the environment. [PUBLICATION ABSTRACT]
ISSN:1520-3255
2168-8435
DOI:10.3905/jai.2012.15.3.114