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Voluntary Corporate Climate Initiatives and Regulatory Loom: Batten Down the Hatches

Ilić, Dragan and Mollet, Janick Christian. (2015) Voluntary Corporate Climate Initiatives and Regulatory Loom: Batten Down the Hatches. WWZ Working Papers, 2015 (06). Basel.

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Abstract

The rationale of voluntary corporate initiatives is often explained with preparedness for future regulation. We test this hypothesis for the Chicago Climate Exchange (CCX) and the Climate Leaders (CL), two popular voluntary US environmental programs to curb carbon emission that were operating during a decisive regulatory event. In 2009 the Waxman-Markey Bill surprisingly passed the House of Representativesand brought the US economy on the brink of a nationwide CO2 emission trading system. In an event study we assess how the stock market adjusted prices when the likelihood of CO2 regulation suddenly increased. Our results suggest that only membership in the CCX was considered beneficial, an initiative whose design happened to dovetail with the bill. Earlier membership announcement effects paint a complementary picture. But membership alone cannot account for the entire price adjustments. Our results reveal that a substantial part of the market reaction consisted of industry-wide effects.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Ilic, Dragan and Mollet, Janick Christian
Item Type:Working Paper
Publisher:WWZ
Note:Publication type according to Uni Basel Research Database: Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2015/06
Last Modified:06 Apr 2018 06:17
Deposited On:22 Dec 2017 12:31

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