Environmental Information and Market Reactions to Environmental Legislation

Environmental issues have attracted national attention and are becoming a focus at many firms. This paper examines the relation between stock price reactions to the Superfund Amendments and Reauthorization Act (SARA) of 1986 and environmental information. We include alternative information sources i...

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Bibliographic Details
Published in:Journal of accounting, auditing & finance auditing & finance, 1997-04, Vol.12 (2), p.149-178
Main Authors: Blacconiere, Walter G., Northcut, W. Dana
Format: Article
Language:English
Subjects:
Environmental cleanup
Environmental impact statements
Financial statements
Stock prices
Studies
Superfund Amendments & Reauthorization Act 1986-US
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Summary:Environmental issues have attracted national attention and are becoming a focus at many firms. This paper examines the relation between stock price reactions to the Superfund Amendments and Reauthorization Act (SARA) of 1986 and environmental information. We include alternative information sources in a test of the value relevance of environmental data. We find some evidence that chemical firms with more extensive environmental disclosures included in their 10-K reports had a less negative reaction to SARA, while firms with greater exposure to Superfund costs (based on EPA data) had a more negative market reaction. A primary contribution of our research is the finding that both financial statement environmental disclosures and estimated Superfund costs have incremental value relevance.
ISSN:0148-558X
2160-4061
DOI:10.1177/0148558X9701200203