Effects of Green Business on Firm Value

This event study tests the impact corporate environmental announcements have on the financial valuation of a firm. The research looks at the set of companies listed in the Dow Jones Industrial Average from 1998 through 2008. Public environmental announcements made by each of the companies were tracked over time using two major news sources, The Wall Street Journal and The New York Times. An event study performed on both positive and negative announcements allows a better understanding of how investors react to different types of environmental news. While the study found that the abnormal returns of positive announcements had no statistical significance, the study analysis attempts to develop a better understanding of why firms would choose to undertake positive environmental policies.