Environmental enforcement and abnormal stock returns: Causal evidence from Brazil
Published:
Jul 22, 2026
Volume:
24
Keywords:
Environmental enforcement
Abnormal returns
Event studies
Media coverage
Brazil
Abstract
This paper studies whether environmental enforcement changes stock prices in Brazil. I combine IBAMA infraction notices, market and accounting data, and hand-curated environmental news involving listed firms. The design is a causal financial event study: daily abnormal returns are compared with a contemporaneous Control Group, and the cumulative abnormal return is the sum of daily treatment effects. Average official IBAMA notices do not generate a robust negative response. In the primary [0,+5] window, notices classified as having significant environmental impact produce an ATT-CAR of -8.88 percentage points, while strict environmental news produces an ATT-CAR of -6.07 percentage points. These samples are small, but the estimates support a selective pattern: Brazilian investors do not mechanically price the average administrative enforcement record; they react when environmental information is material, public, or both.
How to cite
Victor Rangel. Environmental enforcement and abnormal stock returns: Causal evidence from Brazil. Brazilian Review of Finance, v. 24, n. 1, 2026. p. e202611. DOI: 10.12660/rbfin.v24n1.2026.98215.
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