Does the market's reaction to greenhouse gas emissions differ between B2B and B2C? Evidence from South Korea.

• Investigation of the relationship between greenhouse gas emissions and Tobin's q. • Contrasting market reaction to the changes in GHG emissions by B2B and B2C firms. • The B2B firm's environmental efforts are regarded just as costs by the market. • The B2C firms' efforts to reduce GHG emissions are rewarded by the market. • More stringent regulatory pressure is required in B2B firms to reduce GHG emissions. This paper analyzes the relationship between greenhouse gas (GHG) emissions and the financial performance of business-to-business (B2B) or business-to-consumer (B2C) organizations. We find that Tobin's q is positively associated with higher GHG emissions for B2B firms, implying that GHG emissions reduction is regarded as a necessary cost. Meanwhile, a negative relationship is found for B2C firms, which may be due to consumers responding to climate change issues. These findings contribute to our understanding of the heterogeneous relationship in the existing literature. The evidence also implies on the policy level that more stringent regulatory pressure may be required for B2B firms to reduce their GHG emissions. [ABSTRACT FROM AUTHOR]