On the Likelihood and Extent of Listed US Firms’ Disclosures on Climate Change Risk

Abstract

This paper investigates the determinants of the likelihood and extent of climate change risk disclosures made by US firms through SEC filings, using a sample of 6129 US domiciled firm-years for the period from 2009 to 2017 that feature (or do not feature) disclosures about climate change risk made according to general disclosure principles for the reporting of material risks under SEC Regulation S-K. A growing number of US and international institutional investors regard climate change risk information as material to their decision-making process. The potential risks associated with climate change also have attracted growing attention from policy makers and standard setters. We identify factors that are associated with the likelihood of firms initiating and maintaining the disclosure of information on climate change risk, and its extent, contributing information that should be useful in assessing the effectiveness of the current US disclosure requirements.