Environmental disclosures and changes in firm value: new evidence from the BP oil spill

2019 ◽  
Vol 32 (4) ◽  
pp. 610-626
Author(s):  
Steve A. Garner ◽  
Michael J. Lacina
Keyword(s):  
Stock Market ◽  
Oil Spill ◽  
Firm Value ◽  
Market Reaction ◽  
Negative Relationship ◽  
Positive Association ◽  
Environmental Disclosure ◽  
Content Type ◽  
Bp Oil Spill ◽  
Stock Market Reaction

Purpose The purpose of this study is to use a sample of oil and gas firms and examine the relationship between environmental disclosure in the USA Form 10-K and the stock market reaction after the BP oil spill. Design/methodology/approach The study focused on three important time periods associated with the oil spill: the time period beginning with the explosion on April 20, 2010 and ending August 5, 2010, one day after BP permanently sealed the oil leak; the period beginning with the explosion on April 20 and ending with the sinking of the Deepwater Horizon oil rig on April 22; and the period associated with President Obama’s first public comments on the oil spill and his administration’s ban on oil drilling, i.e. April 29-30 and May 3. Findings The results show a negative relationship between environmental disclosure and stock market reaction. Social implications The findings of a negative association could be the result of higher disclosure by firms with more environmental risk because they indeed are riskier and/or they engage in “window dressing” to legitimize their operations and practices and maintain acceptance by society. Originality/value The results in this study run counter to a positive association documented in prior research studying the effects of environmental disasters.

The stock market reaction to dividend reductions and omissions in China

2019 ◽  
Vol 45 (3) ◽  
pp. 381-398
Author(s):  
Jing Dong ◽  
Hui Li ◽  
Kerry Liu ◽  
Xiaohui Wu
Keyword(s):  
Stock Market ◽  
Market Reaction ◽  
Factor Model ◽  
Abnormal Returns ◽  
Chinese Stock Market ◽  
Government Ownership ◽  
Chinese Market ◽  
Content Type ◽  
Stock Market Reaction ◽  
The Government

Purpose The purpose of this paper is to investigate Chinese stock market reaction to the announcements of dividend reductions and omissions. Design/methodology/approach The data sets cover the period from 1990 to 2009. A rolling portfolio approach is performed and the Fama–French three-factor model is used to calculate the post-announcement long-term abnormal returns. The matching method and the sub-sample tests are used to examine the robustness. Findings After controlling for firm size, the unexpected earnings and government ownership, no evidence of the dividend announcement drift is found. The results also show that the government ownership and the large trading play a role in explaining the post-announcement abnormal returns. Originality/value This is the first study concerning the Chinese market that examines the Chinese stock market reaction to dividend cut and omission using a long-time period of data.

Does idiosyncratic risk matter? Evidence from mergers and acquisitions

2019 ◽  
Vol 20 (4) ◽  
pp. 313-329
Author(s):  
Pascal Nguyen ◽  
Younes Ben Zaied ◽  
Thu Phuong Pham
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Stock Prices ◽  
Firm Value ◽  
Stock Price ◽  
Negative Relationship ◽  
Idiosyncratic Risk ◽  
Idiosyncratic Volatility ◽  
Content Type ◽  
Acquisition Announcements

Purpose This paper aims to investigate whether idiosyncratic volatility is a priced risk factor in the Australian stock market. Design/methodology/approach The authors use the change in idiosyncratic volatility around acquisition announcements and the related stock price revaluation to test whether the idiosyncratic risk is priced. If the idiosyncratic risk is priced, increases (decreases) in idiosyncratic volatility should be associated with decreases (increases) in the acquirer’s stock price, as the latter’s future cash flows are discounted at a higher (lower) rate. The sample consists of 2,656 completed acquisitions by Australian listed firms over the period January 1990 to October 2014 for which deal value represents more than 5 per cent of the acquirer’s market value. Findings Increases (decreases) in idiosyncratic risk are associated with significant decreases (increases) in firm value. This negative relationship is robust to the presence of outliers; is unaffected by the incidence of the 2007-2008 financial crisis; holds using alternative measures of idiosyncratic risk; and is more significant after excluding the resources sector. Firms with a higher idiosyncratic risk prior to the acquisition, and firms avoiding stock to pay for the acquisition, experience a more significant stock price increase in relation to a decrease in idiosyncratic risk. Research limitations/implications Considering the small size of the Australian economy, investors may have less scope to mitigate idiosyncratic risk. As a consequence, idiosyncratic risk is associated with the positive excess return, contrary to what standard asset pricing theory assumes. The results support Merton’s (1987) hypothesis that investors are exposed to idiosyncratic risk due to imperfect portfolio diversification and receive compensation for bearing that risk. Practical implications The pricing of idiosyncratic risk may also explain why the Australian stock market has historically offered a high equity risk premium. A practical implication would be for international investors to take advantage of the diversification constraints of local investors to capture higher risk premiums and achieve superior returns. Originality/value While prior studies demonstrate that stocks with higher idiosyncratic risk are associated with higher subsequent returns, the authors show that an increase in idiosyncratic risk is associated with a decrease in stock prices using acquisition announcements as shocks to a firm’s idiosyncratic risk. In other words, the results arise from within-firm variations rather than from cross-sectional differences in stock returns.

Managers' sexually-oriented behavior and firm performance: linking media reports to stock market reactions and legal risk

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amy Nicole Baker ◽  
David King ◽  
Michael Nalick ◽  
Melissa Tempio ◽  
Vishal K. Gupta ◽  
...  
Keyword(s):  
Sexual Harassment ◽  
Stock Market ◽  
Market Reaction ◽  
Market Reactions ◽  
Content Type ◽  
Stock Market Reaction ◽  
Workplace Romance ◽  
Media Reports ◽  
Stock Market Reactions ◽  
The Impact

PurposeThe goal of this study is to examine the association between managers' sexually-oriented behavior in publicly traded firms and subsequent stock market reactions. Both sexual harassment and nonharassing sexually-oriented behavior (i.e. workplace romance) are associated with negative shareholder reactions. The authors also examine factors that may alter the stock market reaction and those that may reduce the risk of lawsuit in sexual harassment cases.Design/methodology/approachInformation about incidents of sexually-oriented behavior was collected from media reports and content coded. An event study with a stock market reaction was used to measure the impact of disclosed sexually-oriented behaviors. Logistic regression was used to assess the relationship between incident characteristics and sexual harassment lawsuits.FindingsDisclosure of managers' sexually-oriented behavior is associated with a negative stock market reaction. Interestingly, the reaction was not more severe for sexual harassment disclosures compared to nonharassing behavior (i.e. workplace romance). Results also suggest that terminating a manager prior to disclosure of an event is negatively related to a harassment lawsuit.Originality/valueThe authors report this as the first study to focus on the stock market reaction of sexually-oriented harassing and nonharassing behavior of managers. This work complements research that documents the negative impact of sexual harassment on individuals by demonstrating these behaviors are associated with loss and risk at an organizational level.

Empirical analysis on corporate environmental performance and environmental disclosure in an emerging market context

2020 ◽  
Vol 15 (6) ◽  
pp. 1061-1082 ◽  
Author(s):  
Merve Acar ◽  
Hüseyin Temiz
Keyword(s):  
Environmental Performance ◽  
Emerging Market ◽  
Positive Association ◽  
Corporate Environmental Performance ◽  
Tobit Regression ◽  
Environmental Reporting ◽  
Environmental Disclosure ◽  
Significant Positive Association ◽  
Content Type ◽  
Environmental Disclosures

PurposeThe purpose of this study is to investigate the association between environmental performance of firms and the level of voluntary environmental disclosure in emerging markets.Design/methodology/approachWe used tobit regression OLS and t-test methods to reveal the association between environmental performance and the level of voluntary environmental disclosure.FindingsWe find a significant positive association between the level of discretionary environmental disclosures and corporate environmental performance. The result is in line with the arguments of economics disclosure theory that argues environmentally good performers disclose more.Practical implicationsMany of the environmentally good firms in Turkey are also listed in the “BIST Sustainability Index,” and this situation can be the result of the relative power of external regulations. Accordingly, it can be suggested to increase the community and governmental pressures for environmental reporting but also gives importance to increase intrinsic motivations for companies to engage in disclosure practices.Originality/valueThis study shed light on relation between environmental performance and environmental disclosure in an emerging market context. Also, it is revisited that the relation between environmental performance and the level of environmental disclosure by testing two different predictions on the level of environmental disclosures.

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