DCC - Séminaire de recherche - Giovanna Michelon - University of Exeter, UK
Environmental Disclosure and the Cost of Capital: Evidence from the Fukushima Nuclear Disaster
Lundi 26 février 2018 (17h15 - 19h00) - Anthropole - 3021
We study the economic consequences of environmental disclosure by exploiting the Fukushima nuclear disaster as a source of variation in the demand for environmental information. Specifically, we hypothesize that the nuclear disaster has increased investors’ uncertainty about firms’ exposure to the energy supply shortage and regulatory actions to limit pollution. Using a large, hand-collected sample of Japanese firms, we find that firms with high disclosure precision within their environmental reports experience a lower increase in the cost of capital than firms with low disclosure precision. Cross-sectional analyses suggest that the effect on the cost of capital is driven by the increase in investors’ uncertainty about the energy supply shortage rather than about future regulatory costs. Consistent with environmental disclosure being related to the cost of capital changes, we find that after the disaster, firms with low environmental disclosure precision in the pre-disaster period increase their environmental disclosures to a greater extent relative to high disclosure precision firms. Taken together, our results provide insights on the dynamics between non-financial and unregulated disclosure and the cost of capital.