This study examines the valuation relevance of greenhouse gas emissions under the European Union Carbon Emission Trading Scheme (EU ETS). We posit that carbon emissions affect firm valuation only to the extent that a firm's emissions exceed its carbon allowances under a cap and trade system and...

We study whether mandatory carbon reporting reduces the selective disclosure of favorable versus unfavorable environmental information. Our setting is a regulation mandating firms to report carbon emissions, or mandatory carbon reporting (MCR). Measuring selective disclosure as the difference...

This chapter presents a selected review of studies that speak to the two related questions of whether capital markets view a firm’s carbon emissions as value relevant and if so, the importance of mandated carbon disclosure in facilitating investors’ assessment. The empirical literature...

In March 2008, the Australian Government announced its intention to introduce a national Emissions Trading Scheme (ETS), now expected to start in 2015. This impending development provides an ideal setting to investigate the impact an ETS in Australia will have on the market valuation of...