Carbon Disclosure, Emission Intensity and Cost of Equity Capital: Multi-Country Evidence

Bui, Binh; Moses, Olayinka; Houqe, Noor

doi:10.2139/ssrn.3318011

Cited by 20 publications

(42 citation statements)

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“…In the second stage, we control the Inverse Mills ratios (INVERSE_Mill) obtained from the first stage in addition to our standard baseline controls. Clarkson et al, 2019), economic consequences of carbon disclosure (Alsaifi et al, 2020;Bui, Moses, & Houqe, 2020) and board diversity and sustainability strategies (Elmagrhi et al, 2019;Li et al, 2017). We find firms' decisions to engage in carbon assurance, adopt extensive carbon disclosure or have a gender-diverse board can signal their commitment to high ethical standards, stakeholder orientation and long-term sustainability performance.…”

Section: Heckman Two Stage Correction Approachmentioning

confidence: 95%

Climate change mitigation: Carbon assurance and reporting integrity

2021

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Concern about climate change has increased the pressure on firms to be accountable for social impact and to report on environmental, social and governance (ESG) performance. Focusing on the view that sustainability-oriented firms are likely to consider wider stakeholder interests and pursue high financial reporting integrity, this paper examines the association between carbon assurance and earnings management.Using a sample of firms listed on the New York Stock Exchange, we find voluntary adoption of carbon assurance (level), carbon disclosure and gender diverse boards are negatively associated with earnings management. Additional tests using different components of carbon assurance (percent and verification) confirm our main results.Our results suggest that firms that voluntarily invest in carbon assurance, carbon disclosure and gender diverse boards are less likely to engage in earnings management and thus have higher reporting integrity. This aligns with the view that firms' ethical concerns translate into higher quality reporting.

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Section: Heckman Two Stage Correction Approachmentioning

confidence: 95%

Climate change mitigation: Carbon assurance and reporting integrity

2021

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“…Previous studies have drawn diametrically opposite conclusions from the impact of the carbon emission trading on the enhancement of the capital market value of a participant [34]. since quotas of carbon emissions are freely allocated, the selling of the remaining quotas would increase the corporate value [35], thus imposing comparatively loose environmental constraints on enterprises. Because the majority of companies involved in carbon emission trading have been engaged in the energy industry, they can shift the carbon price onto their product prices, bringing them significantly positive yet plenteous returns on their stock prices [36].…”

Section: The Impact Of Carbon Emission Trading On the Market Value Of Corporatementioning

confidence: 97%

Impact of the implementation of carbon emission trading on corporate financial performance: Evidence from listed companies in China

Liu¹,

Zhou

Lü

et al. 2021

PLoS ONE

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With the development of ecological paradigm coupled with the relentless implementation of myriad environmental policies in China, the rapid development of carbon emission trading and carbon trading market has had a vital impact on the financial performance of enterprises at the microlevel. This study has sampled the A-share listed companies in China, from 2009 to 2018, and adopted the difference-in-difference (DID) method to investigate the effect of the carbon emission trading on corporate financial performance from the microlevel. Evidence showed that the implementation of carbon emission trading effectively improved the total asset-liability ratio of enterprises, though it reduced the value of the current capital market. Moreover, in the regions under strict legal environment, the enhancement effect of the total asset-liability ratio was more obvious, whereas in the regions under loose legal environment, the reduction effect of the value of the capital market was more obvious. Further analysis showed that the implementation of carbon emission trading could not promote Chinese enterprises to increase R&D investment. Hence the implementation of carbon emission trading has improved the level of non-business income of enterprises incorporated into the trading system, but its impact on the investment income of enterprises was not significant.

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“…The article by Southam () provides a ‘how‐to’ guide on incorporating ESG issues into long term corporate strategy by emphasising the metrics which would facilitate this transition: longer‐term executive compensation plans, longer‐term financial reporting, and flexible financial decision‐making models which embed intangibles. Bui et al () offer additional insights and demonstrate that ESG metrics for carbon and greenhouse emissions can be linked to the cost of capital. The article also extends to the relevance of disclosure reporting in mitigating the cost.…”

Section: Papers In the Special Issuementioning

confidence: 99%

The future trajectory for environmental finance: planetary boundaries and environmental, social and governance analysis

Ding

Daugaard

Linnenluecke

2020

Accounting & Finance

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Urgent issues such as climate change have drawn increasing attention from finance scholars. Most research has situated a corporate response within the context of the environmental, social and governance performance. However, other disciplines express concerns around environmental degradation within broader frameworks, such as the Planetary Boundaries framework. We highlight the different conceptualisations of ESG and planetary boundaries and call for further research that links finance research to the Planetary Boundaries framework. We describe how contributions in the Accounting & Finance Special Issue on Environmental Finance advance research in this area and explore implications for future research that responds to the imperatives of remaining within Planetary Boundaries.

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Carbon Disclosure, Emission Intensity and Cost of Equity Capital: Multi-Country Evidence

Cited by 20 publications

References 0 publications

Climate change mitigation: Carbon assurance and reporting integrity

Climate change mitigation: Carbon assurance and reporting integrity

Impact of the implementation of carbon emission trading on corporate financial performance: Evidence from listed companies in China

The future trajectory for environmental finance: planetary boundaries and environmental, social and governance analysis

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