Study Of Market Reaction To The Disclosure Of Environmental Information

As the improvement of China's economic strength and living standard, the implementation of the strategy of sustainable development, pollution prevention, and environmental protection play an important part in China's economic construction. In recent years, the Environmental Protection Agency paid more attention to listed companies and the new concepts such as the "green credit" and "green securities" became popular. We can see that government departments began to limit pollution aspects of corporate finance investment projects. With the increasing public awareness of environmental protection, investors started to attach importance to the environmental information of listed companies; environmental protection began to affect the investment performance.This paper examines whether publicity (either good or bad) about environmental performance affects companies' share prices. Firstly, we present a case study of GD Power Development Co., Ltd (GDPD) to research the stock market impact of environmental information. Then, the reaction in stock market is tested empirically using event study method. 73 environment events from 2002 to 2008 were collected, including 47 negative events and 26 positive events. Significant negative returns were measured for weak environmental management as indicated by environmental crises in this study. But we also found that stock market didn't react to the positive environment events disclosure. That is to say, for those who accepted the awards or received environmental certification company, the value of environmental improvement projects did not actually be realized in the market.