Investor Reactions to Information Disclosure: Can Providing Public Information About Firms' Pollution Improve Environmental Performance?

Abstract

Information disclosure has been touted as a powerful tool to effect change in environmental quality. Nascent efforts to augment federal information disclosure have begun in Georgia. We conduct the first empirical analysis of investor reactions to a Pollutant Release and Transfer Register (PRTR) outside of the United States. In contrast to the U.S. studies, we find no evidence of negative investor reactions to firms listed on Japan's PRTR. We identify several institutional reasons for these contradictory results. Our results suggest that PRTRs may not have the same effect in all locations and thus further empirical studies of the burgeoning number of PRTRs being implemented globally are warranted. Working Paper Number 2005-001