The Effect of Green Announcements on Stock Returns of New Zealand Listed Companies

The purpose of this paper is to investigate the effect of corporate green announcements on the stock performance of listed companies in New Zealand. We find that the market has a positive, though not significant, reaction to the announcements. New Zealand companies are largely viewed to be already quite green at the onset and the market is not very much surprised by such announcements but expect them to continue being green. Our results are consistent with the view that to be green is costly, especially so in a developed economy where the cost of doing business is high. Our findings underscore the importance for corporate managers in New Zealand that, while any positive green announcements that they make might not have a significant market reaction, they are nonetheless positive.