A pair of California business school researchers has found that companies that disclose greenhouse gas emissions enjoy an immediate rise in stock value and positive returns to shareholders.
Their study appeared in Social Science Research Network.
"When a company makes a voluntary disclosure of this kind, it signals to the investment community that this is a firm that is environmentally responsible," Paul Griffin of UC Davis told The Daily Climate, an environmental news source. "Investors are saying they would prefer to invest in an environmentally responsible firm."
The pair wanted to test a theory known as "voluntary disclosure."
The theory predicts that certain corporate information, if disclosed judiciously, will produce a benefit for shareholders. The theory also predicts that the disclosure of that information will benefit smaller companies - or companies with less information available about them - more than larger companies.
So the team, which also included Yuan Sun of UC Berkeley, went through all news wires released by Corporate Social Responsibility, a corporate news wire, between 2000 and 2010.
The researchers chose this news wire for two reasons: 1) They wanted to track only companies that voluntarily disclosed their emissions (as opposed to a regulatory database), and 2) the news wire is considered the global leader in providing news about corporate social responsibility, allowing the researchers to examine a large worldwide sample.
The researchers ended up with a sample of 172 greenhouse gas disclosures for 84 companies. They then got company stock values for the day before the announcement, the day of and the day after. The researchers also set controls by analyzing companies that did not release emissions information during that time period.
The researchers found that stock value increased when companies voluntarily disclosed their greenhouse gas emissions. They also found that the benefit for smaller companies was greater than for larger companies, supporting the voluntary disclosure theory.
The study showed smaller companies saw an average increase of 2.3 percent in share value after disclosure.
To be sure, "independent of company size or public information availability, the tests ... document a small but reliably positive shareholder response to a Corporate Social Responsibility newswire release," the authors wrote.
The companies analyzed represented a variety of industries, including health care, information technology and financial services.
The researchers hope their data will influence companies to disclose information about their carbon impact.
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