"Investors' Reactions to Environmental Performance: A Global Perspective on Newsweek's Green Rankings," with Juan Murguia, Iowa State University. Monday, December 3, 4:10 PM, 368A Heady Hall.

Abstract: We use event study analysis to determine whether the release of Newsweek’s “Global 100 Ranking” is relevant for the market. We look at one- and two-day event windows to check two possible reactions of the market: changes in the value of a portfolio consisting of one unit of the stock of each listed company, and changes in the relative price of the stocks. The results show that the market reacted to the “Global 100 Ranking” by changing the relative price of the stocks but not the value of the portfolio. Specifically, getting one position closer to the top of Newsweek’s “Global 100 Green Rankings” increases the value of an average firm in the list by one billion dollar. There is also some evidence of a stronger reaction of non-U.S. traded stocks compared to U.S. traded ones. Non-heavy sectors display a more robust reaction to than heavy sectors. Results are very robust to different model specifications.