Journal article
The effect of climate policy uncertainty and induced risks on US aggregate and sectoral stock returns
Research in international business and finance, v 76, 102797
Apr 2025
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
This study examines the change in climate policy uncertainty (∆CPU) on U.S. stock returns. Evidence shows that∆CPU and its lagged value present a positive effect in energy (and sometimes the utility) sector; however, there is also a negative effect that exhibits in aggregate and other sectoral stock returns as investors discount the future income streams, costs of carbon and damage on the valuation of stocks. The ∆CPU on stock returns and volatility further generate adverse effects on stock returns. Similarly, uncertainties from energy and environmental policy change, geopolitical risk, financial crises and COVID-19 negatively affect stock returns.
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•This paper examines the impact of climate policy uncertainty (CPU) on U.S. stock returns.•A change in CPU and its lagged value present a positive effect in the energy (and sometimes the utility) sector.•The induced effects from change of CPU on stock return and volatility generate adverse effects across sectoral stock returns.•Uncertainties from energy policy change and geopolitical risk negatively affect stock returns.•Financial crises and COVID-19 negatively affect aggregate and sectoral stock returns.
Metrics
4 Record Views
1 citations in Scopus
Details
- Title
- The effect of climate policy uncertainty and induced risks on US aggregate and sectoral stock returns
- Creators
- Thomas C. Chiang - Drexel University
- Publication Details
- Research in international business and finance, v 76, 102797
- Publisher
- Elsevier
- Number of pages
- 18
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:001444645100001
- Scopus ID
- 2-s2.0-86000366204
- Other Identifier
- 991022032071704721
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- Web of Science research areas
- Business, Finance