Can Official Environmental Statements Enhance the Stock Price of Firms Disclosing Carbon Information？ Evidence from the “Dual Carbon” Goals
ZOU Jingxian, GAI Ziqi, SHEN Guangjun, QIN Chen
National Academy of Development and Strategy, Renmin University of China; Lingnan College, Sun Yat-sen University; School of Economics, Renmin University of China
Summary:
Carbon information disclosure, as a form of environmental information disclosure, represents a company's commitment to social responsibility. To encourage companies to voluntarily and sustainably fulfill their social responsibilities, a key approach is achieving a “win-win” situation between social value and capital market returns—where a company's socially responsible behavior is recognized by the capital market. This paper uses President Xi Jinping's announcement of China's “dual carbon” goals on September 22nd, 2020, as a policy shock to explore whether official environmental statements can help unify corporate social value and capital market value. Compared to existing research, the significance and marginal contributions of this paper are as follows: (1) Although prior studies have explored the market performance of corporate non-financial information disclosure within the ESG framework, no research has examined the marginal impact of official statements on capital market pricing. Specifically, after the announcement of the “dual carbon” goals, does the capital market favor firms that disclose carbon information or take a bearish view of them？ This essentially reflects the synergy between government and market forces in the field of environmental governance. If official statements can enhance the capital market's valuation of carbon-disclosing firms, it indicates that corporate social responsibility and capital market returns can achieve a “win-win” outcome. Furthermore, it shows that when promoting environmental protection and other public-interest initiatives, governments can use clear official statements to guide market development and encourage corporate investment. Conversely, if market feedback is negative, it suggests a divergence between market and policy perspectives, which could hinder companies' willingness to reduce carbon emissions or even lead to negative effects like superficial compliance with policies. These issues require attention at the policy level. (2) While existing literature has explored the economic consequences of carbon information disclosure in the “dual carbon” context, the “dual carbon” goals have largely been treated as a research background. In contrast, this paper takes the goals as a specific policy shock and uses event analysis to thoroughly examine how this event influences capital market perceptions and pricing of carbon information disclosure. (3) This paper comprehensively explores multiple mechanisms, including investor confidence, certainty premiums and attention from analysts and media. These discussions help us understand the mechanisms behind capital market reactions to official statements and how to better achieve the coordination of corporate social value and capital market value. This paper categorizes companies that disclosed carbon information in their 2019 annual reports as the treatment group and those that did not as the control group. Using a difference-in-differences approach, it compares the relative stock performance of these two groups of companies following the “dual carbon” policy announcement. The results show that, after the announcement of the “dual carbon” goals, the stock prices of companies with prior carbon information disclosure significantly outperformed those of companies without such disclosure. This paper identifies three main mechanisms: First, investor confidence in carbon-disclosing firms was enhanced. Second, firms with prior carbon disclosures, having already exposed potential risks, faced lower future uncertainty, resulting in a certainty premium. This mechanism is primarily reflected in stock price volatility rather than substantive production performance. Third, firms with prior carbon disclosures were more likely to be noticed by market participants, as evidenced by increased media and analyst attention following the announcement of the “dual carbon” goals. Additionally, this paper finds that the capital market's pricing of carbon-disclosing firms is more focused on the quality of the disclosure rather than merely the content of the disclosure. The conclusions of this paper provide at least the following policy implications: First, administrative controls are not the only option for advancing decarbonization tasks or environmental goals. Instead, high-level official statements can drive the market to spontaneously move toward desirable environmental objectives. Compared to various inefficiencies of administrative measures in resource allocation, official statements not only demonstrate a country's commitment to environmental issues but also promote environmental protection through a less distortionary market-driven approach, offering a low-cost policy option. Second, the ultimate effectiveness of official statements, as revealed by the three mechanisms explored in this paper, depends on government credibility and policy enforcement capabilities. Specifically, the market's favorable view of carbon-disclosing firms following the “dual carbon” goals is fundamentally based on trust in policy implementation and effectiveness. Conversely, if a country's policy outcomes consistently fail to meet expectations, it will significantly weaken the “expectation-guiding” effect of official statements, which is similar to central banks' management of market expectations. Third, as the market returns of corporate social responsibility increases, the incentive for “bad firms” to masquerade as “good firms” also rises in an asymmetric information environment. To avoid a “race to the bottom” where inferior firms drive out superior ones, diligent investigations by official environmental agencies, high-quality third-party environmental assessments, professional judgments by brokerage analysts, and supervision from a broad range of market participants are indispensable.
邹静娴, 盖子琪, 申广军, 秦琛. 官方环保表态能否提升碳信息披露企业股价？——来自“双碳”目标提出的证据[J]. 金融研究, 2024, 534(12): 170-187.
ZOU Jingxian, GAI Ziqi, SHEN Guangjun, QIN Chen. Can Official Environmental Statements Enhance the Stock Price of Firms Disclosing Carbon Information？ Evidence from the “Dual Carbon” Goals. Journal of Financial Research, 2024, 534(12): 170-187.
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