Does Carbon Emission Disclosure Affect Market Performance? Evidence from Sri Lanka

The study aims to investigate the relationship between the disclosure of carbon emissions and the market performance of publicly listed companies in Sri Lanka. This is done by analyzing companies that reported their emission data on the Carbon Disclosure Project (CDP) from 2018 to 2022. The analysis utilizes dynamic panel data estimation with a two-step GMM regression to address potential endogeneity. The study indicates that higher levels of Carbon Emission Disclosure (CED) result in increased Tobin’s Q, supporting previous research and promoting wider acceptance and understanding of CED and its impact on market performance. This study is a pioneering effort to examine the influence of CED on market performance, using the GMM system. The researcher has not found any prior studies conducted in Sri Lanka that evaluate all publicly listed companies disclosing emissions-related data as identified by CDP.