Innovator Article

Stock Values Rise When Companies Disclose “Green” Information

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The past year has witnessed an explosion of research supporting the Voluntary Disclosure Theory, which suggests that how much a company discloses is in direct correlation to investors’ premium, increased stock price, elevated consumer trust and a more powerful employer brand. According to a recent study by Professor Paul Griffin, it pays to be green. Griffin and his co-author, Yuan Sun of UC Berkeley, tracked stock prices of firms around the time these companies voluntarily issued press releases disclosing carbon emission information.

The study, “Going Green: Market Reaction to CSR Newswire Releases,” uses the archives of the Corporate Social Responsibility Newswire to identify climate change related press releases issued by companies between 2000 and 2010. For the 172 companies identified as making voluntary disclosures, average stock prices increased just under a half percent in the five-day span around the disclosures, according to the study.

“Companies should not be as reluctant as they have been to provide this information because we show that it can be shareholder positive,” Griffin explains. “Investors are saying they would prefer to invest in an environmentally responsible firm.”

Corporate Bond Market Research Earns Best Paper Awards

Griffin has teamed with Assistant Professor Hyan Hong of the University of Memphis on research focused on the impact of short sellers on the corporate bond market. Savvy investors who follow short sellers to predict bearish news about a company’s stock­­­­­­­­—and sell their stocks in that company to avoid losses—should also keep an eye on the company’s bonds, according to their working paper, “Price Discovery in the Corporate Bond Market: The Informational Role of Short Interest.” Their study won both the Best Accounting Paper and Overall Best Paper from more than 90 submissions at the 2012 Financial Markets and Corporate Governance Conference hosted in April by La Trobe University in Melbourne, Australia.

New Appointment as Associate Dean of Academic Affairs

On July 1, Griffin began a three-year term as associate dean for academic affairs. Griffin previously served in the position from 1999–2004. Dean Steven Currall appointed Griffin to step in for Associate Dean Michael Maher, who is on medical leave.

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