The Effect on Profitability and Stock Price Performance from Corporate Participation in Environmental Programs

Catherine Boulatoff, Carol Boyer, and Stephen J. Ciccone


Climate Change, Corporate Responsibility, Sustainable Business, Carbon Trading


The paper examines the stock return and financial performance of firms that voluntarily participate in the Chicago Climate Exchange’s emissions reduction program. This program sets legally binding emissions targets that volunteering firms must meet. The stock price of firms joining the program increases by a small, statistically-significant amount during the announcement period. The stocks then over-perform during the first year after the announcement. The financial performance of participating firms also improves compared to a matched sample of non-participating firms. The results support the hypothesis that sustainable business practices provide quantifiable benefits to corporations.

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