Disclosure effects, carbon emissions and corporate value
Sustainability Accounting, Management and Policy Journal
ISSN: 2040-8021
Article publication date: 11 February 2014
Abstract
Purpose
The main purpose of this study is to examine the impact of corporate carbon emissions and disclosure on corporate value, especially regarding whether disclosure helps to reduce uncertainty in valuation as predicted by carbon emissions using a unique data set on Japanese companies.
Design/methodology/approach
Empirical analysis of the relations between corporate carbon emissions using compulsory filing data to Japanese Government covering more than 1,000 firms, corporate carbon management disclosure (CDP disclosure), and the market value of equity.
Findings
The authors find that corporate carbon emissions have a negative relation with the market value of equity, the disclosure of carbon management has a positive relation with the market value of equity, and the positive relation between the disclosure of carbon management and the market value of equity is stronger with a larger volume of carbon emissions.
Practical implications
The results may be important when considering the inclusion of carbon disclosure as a component of nonfinancial disclosure. In addition, the findings encourage Japanese companies to reduce carbon emissions and to disclose their carbon management activities.
Originality/value
The authors provide the first empirical evidence of an interactive effect between the volume of carbon emissions and carbon management disclosure on the market value of equity. And, the results concerning the relation between environmental performance, disclosure, and market value are readily generalizable, especially as all companies emit carbon, either directly or indirectly. In addition, the results are arguably free of problems with sampling bias and endogeneity as the authors employ data obtained from the compulsory filing of carbon emissions information.
Keywords
Acknowledgements
The authors would like to thank Professor Carol Adams (The Editor) and three anonymous reviewers. The authors are grateful for the helpful comments and suggestions provided on earlier versions of this paper by participants of the 2010 Korean Accounting Association Annual & Summer International Conference (Busan), the 2011 American Accounting Association 2011 Annual Conference (Denver) and the 2011 International Symposium on Environmental Accounting and Supply Chain (Kobe University). The authors also acknowledge funding support from the Japan Society for the Promotion of Science (Grant-in-Aid for Scientific Research 24530589 and 23683008).
Citation
Saka, C. and Oshika, T. (2014), "Disclosure effects, carbon emissions and corporate value", Sustainability Accounting, Management and Policy Journal, Vol. 5 No. 1, pp. 22-45. https://doi.org/10.1108/SAMPJ-09-2012-0030
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited