Abstract
The effects of climate change and environmental sustainability are among the major issues of the 21st century and so called “green companies” have been attracting a lot of attention. This paper investigates whether or not the stock prices of “green companies” are more sensitive to general corporate news about these firms or environmentally related news. The study utilizes two methodological approaches to assess the research question identified above: (1) abnormal returns before and after the news release; and, (2) the impact of the news release on excess market returns. The results of the study suggest that for most firms, the market has priced in most potential shocks and therefore both corporate and environmental news only has a marginal impact on the stock price returns of green firms. However, there is a suggestion that general corporate news has a greater impact than environmental news. This implies that investors in “Green Companies” are not necessarily motivated by a desire to solve environmental problems, but by more typical risk and return considerations.
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