The Impact of Environmental Strengths and Concerns on the Accounting Performance of Firms in the Energy Sector

Energy sector firms are highly affected by the imposition of costs and community attitudes related to their environmental impact. In this chapter, we study the impact of environmental strengths and concerns of firms in the energy sector on their firm performance. We aim to uncover whether positive environmental activities add extra costs or help firms in the energy industry achieve a higher future profitability and compare this impact with firms that do not belong to that industry. Based on the environmental scores compiled by Kinder, Lyndenberg and Domini Research and Analytics, Inc., we show that the environmental concerns of US firms in the energy industry are significantly lower than their environmental strengths and this difference is much larger for energy firms than for firms that do not belong to the energy industry. In addition, we find that only the environmental concerns of energy sector firms have predictive value in terms of future corporate performance that is incremental to a group of earnings-predicting variables. Our results for the energy sector indicate that reducing environmental concerns pays off by improving corporate profitability

Introduction: Financial implications of regulations in the energy industry

The characteristics of the energy industry lead to natural monopoly. The technological and economic features of the industry are such that a single provider is often able to serve the overall demand at a lower total cost than any combination of smaller entities could. Competition cannot thrive under these conditions. For this reason, the regulations on this industry are not only targeted at fair pricing but also ensuring reliability and safety. Regulations on energy industry also target at their environmental impact as well. This book provides cross country studies on the financial, economic, and legal aspects of the regulations of energy firms

The financial reward for environmental performance in the energy sector

This article studies the financial reward for environmental performance of firms in the energy sector. Because of their substantial impact on environment, energy sector firms convey a particular status in the environmental–financial performance question, as compared with firms outside this sector. We use the environmental scores compiled by Kinder, Lyndenberg, and Domini Research and Analytics to construct two portfolios that differ in their environmental performance. We find that, between 2000 and 2011, energy sector firms with good environmental performance financially outperform energy sector firms with poor environmental performance. A portfolio strategy with a long (short) position in energy sector firms with good (poor) environmental performance generates an annual abnormal return of 9.624% after correcting for market, size, book-to-market and momentum risks. For firms outside the energy sector, the performance of the two portfolios is statistically insignificant. Using the VIX index, we also show that the market does not reward environmental performance of energy sector firms in periods of high financial uncertainty

When corporate social responsibility causes tone inflation in earnings press releases: Evidence from the oil and gas industry

no ISSN. no volume/ issue.edition: Forthcomingstatus: publishe

The Impact of Environmental Strengths and Concerns on the Accounting Performance of Firms in the Energy Sector

Energy sector firms are highly affected by the imposition of costs and community attitudes related to their environmental impact. In this chapter, we study the impact of environmental strengths and concerns of firms in the energy sector on their firm performance. We aim to uncover whether positive environmental activities add extra costs or help firms in the energy industry achieve a higher future profitability and compare this impact with firms that do not belong to that industry. Based on the environmental scores compiled by Kinder, Lyndenberg and Domini Research and Analytics, Inc., we show that the environmental concerns of US firms in the energy industry are significantly lower than their environmental strengths and this difference is much larger for energy firms than for firms that do not belong to the energy industry. In addition, we find that only the environmental concerns of energy sector firms have predictive value in terms of future corporate performance that is incremental to a group of earnings predicting variables. Our results for the energy sector indicate that reducing environmental concerns pays off by improving corporate profitability.status: publishe

The Financial Reward for Environmental Performance in the Energy Sector

This article studies the financial reward for environmental performance of firms in the energy sector. Because of their substantial impact on environment, energy sector firms convey a particular status in the environmental–financial performance question, as compared with firms outside this sector. We use the environmental scores compiled by Kinder, Lyndenberg, and Domini Research and Analytics to construct two portfolios that differ in their environmental performance. We find that, between 2000 and 2011, energy sector firms with good environmental performance financially outperform energy sector firms with poor environmental performance. A portfolio strategy with a long (short) position in energy sector firms with good (poor) environmental performance generates an annual abnormal return of 9.624% after correcting for market, size, book-to-market and momentum risks. For firms outside the energy sector, the performance of the two portfolios is statistically insignificant. Using the VIX index, we also show that the market does not reward environmental performance of energy sector firms in periods of high financial uncertainty.status: publishe

The green thumb in the energy industry - The impact of managerial political affiliation on corporate environmental performance (accepted)

no ISSN. no volume/issuestatus: publishe

Managers set the tone: Equity incentives and the tone of earnings press releases

Earnings press releases, as a timely vehicle for communicating a firm’s performance to third parties, can be used by managers to influence the perception of the firm’s achievements. Taking the stock price reaction to the tone of earnings press releases at earnings announcements into account, we argue that equity-based incentives induce managers to inflate the tone. We further posit that the impact of tone on the abnormal stock returns at the earnings announcements depends on the magnitude of the equity-based incentives. Based on over 26,000 earnings press releases of S&P1500 firms between 2004Q4 and 2012Q4, we find that the tone of earnings press releases tends to be more positive when the managerial portfolio value is more closely tied to the firm’s stock price. We also find that investors react proportionally less to the tone as managers’ equity incentives increase.publisher: Elsevier articletitle: Managers set the tone: Equity incentives and the tone of earnings press releases journaltitle: Journal of Banking & Finance articlelink: http://dx.doi.org/10.1016/j.jbankfin.2015.10.007 content_type: article copyright: © 2015 Elsevier B.V. All rights reserved.status: publishe

Blockchain as a Technology Backbone for an Open Energy Market

As the underlying technology behind Bitcoins, blockchains have attracted the attention of entrepreneurs, policymakers, and academics alike. Its potential to facilitate transactions, coordination without a central authority, and its capacity to support smart contracts are likely to open the door for its application to numerous settings. One of the more prominent applications is the clean energy sector. This chapter provides insights on how this novel technology that offers disintermediation, transparency, and flexibility is providing new ways of interaction to tackle challenges of communication, coordination, and efficiency in the clean energy sector. Along with providing a brief overview of the blockchain technology, we discuss some of the prominent clean energy applications of the technology, such as micro energy exchange grids, cap and trade, and electrical vehicle charging networks. Furthermore, the chapter includes empirical evidence on initial coin offerings (ICOs) launched by projects focusing on various aspects of development of renewable energy sector. We identify six prominent themes of services, namely, clean cryptocurrency mining, energy exchange, project financing, investment intermediation, network building, and hosting incentive programs. Furthermore, we find that clean energy ICOs tend to be more successful than other similar ICO projects

Introduction:Financial implications of regulations in the energy industry

The characteristics of the energy industry lead to natural monopoly. The technological and economic features of the industry are such that a single provider is often able to serve the overall demand at a lower total cost than any combination of smaller entities could. Competition cannot thrive under these conditions. For this reason, the regulations on this industry are not only targeted at fair pricing but also ensuring reliability and safety. Regulations on energy industry also target at their environmental impact as well. This book provides cross country studies on the financial, economic, and legal aspects of the regulations of energy firms