Corporate carbon emissions and market valuation of organic and inorganic investments

Adamolekun, Gbenga; Kwansa, Nana Abena; Kwabi, Frank

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.

Citation

Adamolekun, G., Kwansa, N. A., & Kwabi, F. (2022). Corporate carbon emissions and market valuation of organic and inorganic investments. Economics Letters, 221, Article 110887. https://doi.org/10.1016/j.econlet.2022.110887

• Journal Article Type: Article
• Acceptance Date: Oct 10, 2022
• Online Publication Date: Oct 14, 2022
• Publication Date: 2022-12
• Deposit Date: Oct 14, 2022
• Publicly Available Date: Oct 14, 2022
• Journal: Economics Letters
• Print ISSN: 0165-1765
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 221
• Article Number: 110887
• DOI: https://doi.org/10.1016/j.econlet.2022.110887
• Keywords: Carbon emissions, Market valuation, Organic investments announcements, Inorganic investment announcements
• Public URL: http://researchrepository.napier.ac.uk/Output/2933012