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The Capital Market Impact of Blackrock’s Thermal Coal Divestment Announcement

Highlights•The announcement of divestment from thermal coal mining companies by Blackrock, a large US institutional asset manager, had a negative impact on share prices of large mining companies, especially of those headquartered in the US.•Capital markets acknowledged the divestment announcement as value- increasing for Blackrock.•Blackrock protected value for its clients by decreasing its stake in negatively affected US companies before it published the announcement.AbstractThis study examines how coal companies were affected by the announcement of thermal coal divestment made by Blackrock, a large institutional asset manager. Following the announcement, the largest thermal coal mining companies exhibited negative abnormal returns. However, the stock prices of other firms were not affected. Blackrock’s own share price increased following the announcement. We provide additional evidence that Blackrock protected its clients by lowering its exposure towards affected companies before the announcement. Overall, our results show that divestment has significant impacts on the companies in question and that the capital market sees divestment as value-enhancing for the divesting institution.

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