The cross-section of returns, benchmark model parameters, and idiosyncratic volatility of the world’s nuclear energy firms after Fukushima Daiichi

in Energy Economics (2014), 41

This study analyzes how the stock market returns, the factor loadings from the Carhart (1997) 4-factor model, and the idiosyncratic volatility of shares in energy firms have been affected by the Fukushima ... [more ▼]

This study analyzes how the stock market returns, the factor loadings from the Carhart (1997) 4-factor model, and the idiosyncratic volatility of shares in energy firms have been affected by the Fukushima nuclear accident. Unlike existing studies, which provide evidence of a wealth transfer from nuclear to renewable energy firms for specific countries, we use an international sample and investigate whether changes in the regulatory Environment and the firm-specific commitment to nuclear and renewable energies correlate with the capital market's reactions to the Fukushima Daiichi accident. Our findings suggest that the more a firm relies on nuclear power, the more its share price declined after the accident. A commitment to renewable energies does not prevent declines in share prices but significantly helps to reduce the increase in market beta that is associated with this event. Nuclear energy firms domiciled in countries with a higher number of regulatory interventions that were triggered by the catastrophe have lower abnormal returns than those that are domiciled elsewhere. However, as a cross-sectional analysis reveals, a stronger commitment to nuclear power is the main driver for negative stock market returns. Furthermore, nuclear energy firms domiciled in countries with stronger regulatory shifts away from nuclear energy experience significant increases in market beta and the book-to-market equity factor loading according to the Carhart (1997) 4-factor model. We conclude that capital market participants are able to differentiate between the affectedness of firms with respect to their product portfolio. Energy firms could prevent increases in market beta due to catastrophes such as the Fukushima Daiichi accident by shifting some of their energy production from nuclear to renewable or other sources. [less ▲]

The world capital markets’ perception of sustainability and the impact of the financial crisis

in Journal of Business Ethics (2014), 122(3), 475-500

Using a unique dataset provided by the international rating agency GES®, we investigate the effects of corporate sustainability and industry-related exposure to environmental and social risks on the ... [more ▼]

Using a unique dataset provided by the international rating agency GES®, we investigate the effects of corporate sustainability and industry-related exposure to environmental and social risks on the market value of MSCI World firms. The results show a negative relationship in the earlier years of our sample period. However, the analysis reveals that the capital market perception of sustainability has changed owing to the financial crisis. Looking at the height of the crisis in September 2008, the month in which Lehman Brothers shocked the world’s capital markets by filing for Chapter 11 bankruptcy protection, we find that the previously negative perception of corporate sustainability across its various dimensions was positively affected and offset. In addition, as a moderated regression analysis shows, the crisis led to a positive perception of corporate sustainability in industries that are exposed to higher environmental and social risks. Our study has the practical implication that executives, in particular in industries with high environmental and social risks, should increase their commitment to corporate sustainability due to the changes in the institutional setting triggered by the financial crisis. [less ▲]

The effect of the German Accounting Law Modernization Act (BilMoG) on the earnings quality of private firms

in Corporate Finance (2013), 5

The 2009 Accounting Law Modernization Act (BilMoG) had a considerable impact on German accounting principles, especially in terms of tax regulations, recognition, and measurement options. This paper ... [more ▼]

The 2009 Accounting Law Modernization Act (BilMoG) had a considerable impact on German accounting principles, especially in terms of tax regulations, recognition, and measurement options. This paper analyzes whether these changes have had a positive effect on the quality of earnings reported in German financial statements. We find that earnings management significantly decreased after the implementation of BilMoG. This study is the first to examine potential improvements on earnings quality as a result of BilMoG. Our results indicate that in the run-up to the reform, legislators effectively aligned domestic accounting standards with IFRS principles, which led to improved transparency within financial reporting. [less ▲]

Nachhaltigkeitsberichterstattung als Instrument der Kapitalmarktkommunikation

in KoR : internationale und kapitalmarktorientierte Rechnungslegung : IFRS (2010), 7-8

Der Beitrag erläutert die Grundzüge der Nachhaltigkeitsberichterstattung, stellt den aktuellen Forschungsstand zur Verbreitung dieses Berichtsinstruments anhand ausgewählter Studien dar und analysiert die ... [more ▼]

Der Beitrag erläutert die Grundzüge der Nachhaltigkeitsberichterstattung, stellt den aktuellen Forschungsstand zur Verbreitung dieses Berichtsinstruments anhand ausgewählter Studien dar und analysiert die Praxis der Nachhaltigkeitsberichterstattung der Unternehmen des DJ STOXX Europe 600. [less ▲]