Journal of Forest Economics > Vol 17 > Issue 4

Effects of litigation under the Endangered Species Act on forest firm values

Changyou Sun, , Xianchun Liao
Suggested Citation
Changyou Sun and Xianchun Liao (2011), "Effects of litigation under the Endangered Species Act on forest firm values", Journal of Forest Economics: Vol. 17: No. 4, pp 388-398.

Publication Date: 0/12/2011
© 0 2011 Changyou Sun, Xianchun Liao
JEL Codes:C35Q23
Abnormal returnCapital Asset Pricing ModelLitigationRisk


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In this article:
Data sources 
Empirical results 
Conclusion and discussion 


The Endangered Species Act (ESA) has been a source of litigation and subject to court interpretation during the past several decades. In this study, event analysis was employed to examine the impact of six court decisions related to the ESA on the financial performance of U.S. forest products firms. The finding of abnormal returns revealed that all six events generated the expected positive or negative returns, and among them, four were statistically significant. Changes in systematic risk reflected the reaction of the stock market to the verdict announcements. Programs designed for habitat conservation can be implemented to compensate private landowners or firms for costs associated with protecting species on private forestlands.