Does fossil fuel divestment contribute to the clean energy transition? : an event study on fossil fuel divestment announcements
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- Master Thesis 
This thesis aims to assess whether fossil fuel divestment announcements of institutions have a financial impact on the energy transition, by utilizing event study methodology to measure abnormal returns and trading volume of the top hundred global fossil fuel and renewable energy stocks with the highest market capitalization at the date of fossil fuel divestment announcements from 2014 through 2019. While our findings do not yield significant abnormal returns for fossil fuel stocks for the sample from 2014 through 2019, we do find significant abnormal returns in events prior to 2016, suggesting that investors reacted to announcements in the earlier years of the divestment movement and do not find the recent announcements to provide significantly new information. We do not find significant abnormal returns for renewable energy stocks, both during the sample from 2014 through 2019, and in the sample prior to 2016. In terms of trading volume, the findings yield significant cumulative average abnormal volume (CAAV) for both fossil fuel and renewable energy stocks during the event windows, which are defined as a subset of days before, after, and on the announcement day (day zero). Fossil fuel stocks experience positive CAAV during the short [0:3 days], long [0:10 days], and full event windows [-3:10 days], and renewable energy stocks experience negative CAAV during the long and full windows.