Voluntary corporate climate initiatives and regulatory loom: Batten down the hatches

Abstract

King and Lenox (2001) argued that “when does it pay to be green” might be a more important question for firms than whether it pays at all. We present an event study that suggests that it pays in the tangible presence of regulatory pressure, depending on how well the chosen scheme to become green fits with the threatened regulatory design. To this end, we exploit the unexpected passage of the Waxman-Markey Bill in 2009. This bill came as a surprise and brought the US economy on the brink of a nationwide CO2 emission trading syste Show more