Investor Rewards to Climate Responsibility: Stock-Price Responses to the Opposite Shocks of the 2016 and 2020 U.S. Elections
We study firms' stock-price movements in reaction to political changes in the U.S. As expected, the 2016 election boosted carbon-intensive firms. Surprisingly, firms with climate-responsible strategies also gained, especially those firms held by long-run investors. Such investors appear to have bet on a 'boomerang' in climate policy. Harbingers of a boomerang appeared during Trump's term. The 2020 election marked its arrival.