Disclosure and Liquidity: The Ownership Channel
Type
working paper
Date Issued
2025
Author(s)
Abstract
We examine how corporate carbon disclosure affects equity-market liquidity and ownership. Using Trucost data from 2010–2023 and a staggered difference-in-differences design, we find that first-time greenhouse gas disclosures narrow bid-ask spreads by 3%, reduce Amihud illiquidity by 4%, and increase trading volume and turnover by 4%. Institutional ownership rises by roughly $45 billion, corresponding to about 0.4% of the total market value of new disclosers. Liquidity gains are most substantial for high-emission and late-reporting firms. Our results indicate that environmental transparency, though non-financial in nature, is financially material: it attracts institutional capital, alleviates information asymmetry, and enhances market efficiency.