Aspects of Statehood, Regulation and Accounting
4 Capital Market Implications of Trading in and Accounting forEmission Rights 107
4 Capital Market Implications of Trading in and Accounting for Emission Rights 4.1 Development of Research Questions The previously derived questions for empirical research address important re- search gaps concerning the environmental and energy policies as well as ac- counting for emission rights. This section is to pick up these questions and to sketch possible outcomes of the subsequent empirical investigations. In the re- mainder of Chapter 4, the models used in this study are described in a general way (in Section 4.2), the adapted equations to answer the specific questions are presented (in Section 4.3), and finally evidence for the raised questions is pre- sented (in Sections 4.5 through 4.7, respectively). Considering the underlying economic mechanisms of emission trading schemes as well as the legal framework as adopted in the EU, a first research question can be formulated as follows: Q1: Does the EU ETS introduce distributional effects between the regulated energy firms and other market participants? The concurrent theories on the effectiveness of public policy allow for three possible outcomes when empirically answering this question. Firstly, consistent with the public interest hypothesis that a regulation distributes wealth from the firms to the consumers, it can be assumed that a trade in emission rights has a negative impact on the capital market value of listed firms. The reason is that curbing pollution by rights, emission affects the production of regulated firms and is likely to lead to additional costs which cannot be completely passed on to customers. An ETS...
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