Working Paper: NBER ID: w25310
Authors: Stefano Ramelli; Alexander F. Wagner; Richard J. Zeckhauser; Alexandre Ziegler
Abstract: Donald Trump's election and his nomination of Scott Pruitt, a climate skeptic, to lead the Environmental Protection Agency drastically downshifted expectations on US climate-change policy. We study firms' stock-price reactions and institutional investors' portfolio adjustments after these events. As expected, carbon-intensive firms benefited. Should not companies with responsible strategies on climate change have lost value, since they were paying for actions that were now less urgent? In fact, investors actually rewarded such firms. The premium the firms received resulted, at least in part, from the move into climate-responsible stocks by long-horizon investors presumably expecting a post-Trump rebound to green policy.
Keywords: No keywords provided
JEL Codes: G14; G38; G41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| institutional investors' portfolio adjustments (G23) | stock prices of climate responsible firms (Q54) |
| climate responsibility (Q54) | stock prices (G12) |
| Trump's election (K16) | stock prices of carbon-intensive firms (G32) |
| climate responsibility (Q54) | stock prices of climate responsible firms (Q54) |
| Pruitt's nomination (I19) | stock prices of firms with advanced climate responsibility designations (G38) |