The valuation relevance of Greenhouse Gas Emissions under the European Union Carbon Emissions Trading Scheme

Clarkson, Peter M., Li, Yue, Pinnuck, Matthew and Richardson, Gordon D. (2015) The valuation relevance of Greenhouse Gas Emissions under the European Union Carbon Emissions Trading Scheme. European Accounting Review, 24 3: 551-580. doi:10.1080/09638180.2014.927782

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Author Clarkson, Peter M.
Li, Yue
Pinnuck, Matthew
Richardson, Gordon D.
Title The valuation relevance of Greenhouse Gas Emissions under the European Union Carbon Emissions Trading Scheme
Journal name European Accounting Review   Check publisher's open access policy
ISSN 0963-8180
1468-4497
Publication date 2015-01-01
Year available 2014
Sub-type Article (original research)
DOI 10.1080/09638180.2014.927782
Volume 24
Issue 3
Start page 551
End page 580
Total pages 30
Place of publication Abingdon, Oxon, United Kingdom
Publisher Routledge
Collection year 2015
Language eng
Formatted abstract
This study examines the valuation relevance of greenhouse gas emissions under the European Union Carbon Emissions Trading Scheme. 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 the extent of its inability to pass on carbon-related compliance costs to consumers and end-users. We measure a firm's ability to pass on the future costs by its market power and its carbon performance relative to its industry peers. The results show that firms' carbon allowances are not associated with firm valuation but the allocation shortfalls are negatively associated. We also find that the negative association between firm values and carbon emission shortfalls is mitigated for firms with better carbon performance relative to their industry peers and for firms in less competitive industry sectors. These findings, which suggest that the valuation impact of carbon emissions is unlikely to be homogenous across firms or industrial sectors, have important implications for future research design and for the disclosure and recognition of a firm's greenhouse gas liabilities
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2015 Collection
UQ Business School Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 4 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 6 times in Scopus Article | Citations
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Created: Thu, 09 Oct 2014, 18:51:15 EST by Karen Morgan on behalf of UQ Business School