Date Available


Year of Publication


Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation


Business and Economics



First Advisor

Dr. Nicole Thorne Jenkins

Second Advisor

Dr. Hong Xie


On February 8, 2010, the SEC issued an interpretive guidance, SEC FR-82, (guidance hereafter) and required public firms to disclose climate change risk in their 10-Ks. However, this guidance has been controversial. Using firm-year observations from the Russell 3000 Index, this paper shows the following findings regarding the usefulness of climate change risk disclosure. First, a review of the legislative process leading to the 2010 guidance suggests that institutional investors and Democratic politicians play a key role in lobbying the SEC to require the climate change disclosure. Second, firms with climate change risk disclosures have lower future return on assets, driven mainly by lower profit margin. Third, these firms also have lower earnings persistence and smaller forward earnings response coefficient (FERC). Fourth, an event study reveals that these firms experience significantly lower cumulative abnormal return during the 5-days around the 10-K filing date, indicating that investors may incorporate this information into their investment decisions. Fifth, textual analysis indicates that less readable climate change risk disclosure exacerbates the aforementioned effects. Sixth, these firms have lower future firm value, indicating that the climate change risk disclosure signals future firm value. Lastly, tests show that climate change disclosure in the 10-K is more informative than that voluntarily disclosed in the Carbon Disclosure Project (CDP) survey, indicating that SEC-mandated disclosure provides information incremental to voluntary disclosure. Overall, this paper documents the usefulness of climate change risk disclosure required under SEC FR-82.

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