Title: Environmental news and stock markets: the need for further evidence in developing countries

Authors: Mariana Conte Grand; Vanesa D'Elia

Addresses: Universidad del CEMA, Av. Córdoba 374, C1054AAP, Buenos Aires, Argentina. ' Universidad del CEMA, Av. Córdoba 374, C1054AAP, Buenos Aires, Argentina

Abstract: Firms' environmental behaviour depends mostly on how their revenues and costs are affected by consumers and investors' valuation of their specific sector and, at the same time, by the established regulatory framework and its enforcement. There is an empirical literature, which supports the impact of environmental information releases on stock prices, and finds larger effects in developing countries than in developed ones. We believe there is no strong reason why 'abnormal' returns should be higher due to environmental news in developing countries, which usually have weak regulatory institutions and low environmental consciousness. To illustrate our case, we perform an analysis of Argentina and we find similar results to those obtained in developed countries. Our calculations are robust to different estimation periods and models, and when subjected to parametric as well as non-parametric tests. We suggest more study is needed on the relationship between environmental news and the stock market in developing countries.

Keywords: environmental management; environmental news; capital markets; sustainable development; corporate environmental responsibility; event studies; developing countries; Argentina; sustainability; environmental information releases; stock prices; stock markets.

DOI: 10.1504/IJSD.2012.050033

International Journal of Sustainable Development, 2012 Vol.15 No.4, pp.374 - 398

Accepted: 14 Nov 2011
Published online: 25 Oct 2012 *

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