University of Zurich
Department of Banking and Finance
Institutional Affiliation: University of Zurich
NBER Working Papers and Publications
|November 2018||Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election|
with Alexander F. Wagner, Richard J. Zeckhauser, Alexandre Ziegler: w25310
Donald Trump's 2016 election and the subsequent nomination of Scott Pruitt, a climate skeptic, to lead the Environmental Protection Agency drastically downshifted expectations on US climate change policy. Firms' stock-price reactions to these events reveal whether their climate strategies affected their valuations. As widely reported, firms in industries with high carbon intensity benefited, at least briefly. It might be expected that companies with "responsible" strategies on climate change would also have lost value, since they were paying for actions that seemed less urgent. In fact, investors actually rewarded such firms. The analysis shows that this observed climate responsibility premium results, at least in part, from the strategic behavior of long-horizon investors who looked into ...