"Tradable permit regulations have recently been implemented for climate change policy in many countries. One of the first mandatory markets was the EU Emission Trading System, whose first phase ran from 2005-07. Unlike taxes, permits expose firms to volatility in regulatory costs, but are...

This chapter presents a selected review of studies that speak to the two related questions of whether capital markets view a firm’s carbon emissions as value relevant and if so, the importance of mandated carbon disclosure in facilitating investors’ assessment. The empirical literature...

We introduce the decomposition of carbon emissions into an expected and an unexpected component and analyze the association between these components and firm value. The expected component captures a firm's average carbon emissions inherent to its business model and operating environment. The...