Investing in carbon offset market

by | Jun 12, 2023 | finance

 

Undergraduate empirical research paper, bachelor BA, major Finance. Topic climate finance
Investigate if:
A: Companies that are active on the Carbon offset market (buyers)
Have a better
B; Perform financially better / Result on the stock market
Research question: What is the effect of investing in carbon offset markets on firm valuation?
Possible regression model/methodology see appendix1

Dataset required:

1. Number of carbon credits acquired per company / industry sector
2. Financial performance of stock listed companies: who invested in carbon credits + who do not

Data considerations

1. Carbon offset market
– Data of market volume by company gvkey number and name, industry sector and country.
o should be compared to the total estimated value of the carbon offset market (does the dataset cover 2%/ 10% / 50% or more of the total estimated market value?  needs to be sufficiently large set (like provided from me)
– Where is data available on the total estimated value of carbon offset market (multiple sources or estimates). Source is important.

2. Financial performance by companies
– List of stock listed companies, per country, per industry sector
– Per company, the financial performance: this can be determined by either
o Current Earnings per share
o Firm size
o Profitability
o Leverage
o Earnings per share growth over past 5 years
o Stock price growth over past 5 years
o Current market value of company
o Market value per company growth over past 5 years
o Other??
Note: all tests must be done via STATA + logbook of process

Data already acquired

A: Companies that are active on the Carbon offset market
– Available is a data file (excel) with carbon offset buying volume over the past 11 years included: sector, country, retirement date, compliance/voluntary. This file is obtained by a mentor, so it is highly preferable to use
– If other or better data sets are to be obtained, it can be considered to either
o Merge the files
o Choose the preferable one, but with good explanation why

B; Financial performance by companies
– A list of companies with their financial performances, described in data considerations 2. Financial performance data should be gathered for both companies that do participate in the carbon offset markets and for companies that do not participate in the carbon offset market. The reason for this is the binary ICC in appendix1
Required outcome

Step 1: Obtain a dataset providing quantities of acquiring carbon credits per company

Step 2: Obtain a dataset of financial performance per company

– As stated in appendix 1, sector information also needed for the binary ERS

It is anticipated that the number of companies active on the market of carbon offset is smaller than the number of stock listed companies worldwide. Therefor the number of companies on data A should be much smaller than the number of companies on data B.

Data A & Data B should be compared per company, (country, per industry sector)

The goal of this empirical research paper is to examine:

1. Do companies that are active on carbon offset market financially perform better than companies who are not active on carbon offset market
2. To examine the effect of industry and regulatory factors on the relationship between carbon offset markets and firm valuation.
3. (Are certain countries more active than other industry sectors AND do they perform financially better)  not main point but nice to add

What is expected:
– Write the “research question and hypothesis” (small part), write the “methodology and data” part, the “empirical results” and the conclusion / discussion
– All parts written must align with the literature review that has been sent as well. Otherwise those parts need to be rewritten as well. If you can apply higher quality then a diverse version is admitted.

Possible hypothesis:
H0: there will be no effect of investing in carbon credits on firm valuation
H1: Firms that participate in carbon offset markets will have a higher valuation than firms that do not participate.
H2: The positive impact of carbon offset market participation on firm valuation will be stronger in countries with more stringent environmental regulations.
(H3: carbon offset markets will have a positive effect on the growth potentials for firms in developing countries )  might be eliminated

 

 

 

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.


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God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

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