How can firms' transition to a low-carbon economy affect the distance to default?

López, Cristina Gutiérrez; Castro, Paula; Fernández, María Teresa Tascón

doi:10.1016/j.ribaf.2022.101722

Cited by 17 publications

(19 citation statements)

References 72 publications

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“…Then we investigate the direct effect of low-carbon technological innovations on default risks. Analyzing the straightforward relationship, we find that low-carbon innovations positively affects a firm's distance-to-default, which is the indicator of default risks, consistent with previous results of low-carbon transition and traditional innovations [11][12][13]. Taking alternative default risk measurements, normalization methods, heterogeneous analysis and instrumental variables, the straightforward effects are tested with robustness and endogeneity issues.…”

Section: Introductionsupporting

confidence: 81%

“…Empirical research also supports that the technological innovation on climate change transition leads to a good enterprise performance [8,9]. Through stranded assets and innovation, firms advance to low-carbon production has a positive effect on the default risk [10,11].…”

Section: Introductionmentioning

confidence: 71%

“…Positive effect originates from many aspects. As a result, Gutiérrez-López et al [11] investigate empirically that firms take efforts in the low-carbon production operate more safely, with moderating effect of stranded assets and innovation. A related analysis is presented by Bannier et al [9].…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…The positive effect of corporate low-carbon innovations on firm performance and default risk is abundant based on comprehensive literature review [15] and representative research [8,11,12]. Investors consider a firm competitive with owning more and higher-quality patent.…”

Section: Hypothesismentioning

confidence: 99%

“…In this study, we need to measure firm default risks with the dependent variable. According to the research from Bannier et al [9], Gutierrez-Lopez et al [11] and Meles et al [13], we use distanceto-default(DD) as main dependent variables. The distance-to-default measures credit default risks, meaning that firms with higher DD have lower default risks.…”

Section: Dependent Variablesmentioning

confidence: 99%

See 4 more Smart Citations

The Impact of Climate Change Transition Innovations on the Default Risk Evidence from Low-Carbon Patents in China

Huang,

Huang

2024

Preprint

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In the process of climate change mitigation and adaptation, the focus on climate risks driven by transition innovations has received widespread attention from governments, regulators and investors. Based on the identification of low-carbon patents through the Green and Low-carbon Technology Inventory in China, we construct low-carbon innovation measurements of listed firms in China from 2015 to 2021 then an empirical model is used to investigate the impact and mechanism of climate transition innovations on the default risk. The baseline regression model shows that low-carbon innovations can mitigate the default risk of firms. Moreover, our findings are supported by instrumental variable regressions that use time costs of innovation. In addition, the mediation effect demonstrates that investor attention, total factor productivity, and technology spillovers are paths for transition innovations to affect the default risk. This study reveals that low-carbon technological advances have a positive effect on climate transition risks. Further, it provides empirical evidence for listed companies to develop low-carbon innovations.

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Section: Introductionsupporting

confidence: 81%

Section: Introductionmentioning

confidence: 71%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Hypothesismentioning

confidence: 99%

Section: Dependent Variablesmentioning

confidence: 99%

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The Impact of Climate Change Transition Innovations on the Default Risk Evidence from Low-Carbon Patents in China

Huang,

Huang

2024

Preprint

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Carbon performance and financial debt: Effect of formal and informal institutions

Ferreras,

Castro,

Tascón

2024

Corp Soc Responsibility Env

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Climate change has led to a transformation of the economy, with institutions such as the European Commission pushing for decarbonization. Using a sample of 4607 European‐listed firms from 2005 to 2019, we find evidence that political and financial factors moderate the relationship between carbon performance and financial debt. Environmentally responsible firms operating in countries with better democratic values, associated with higher degrees of freedom and law enforcement, are favored with more access to debt. Similarly, better carbon performers obtain more debt in countries with concentrated banking markets, greater financial stability, and lower government debt. Furthermore, the cultural factors uncertainty avoidance and long‐term orientation moderate the relationship between carbon performance and financial debt, as well as the effect of political and financial institutions on this relationship. These results show the relevant role formal and informal institutions play in facilitating the decarbonization of firms, as well as the importance of coordinating European policies.

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Does credit carbon exposure affect banks' profits and risks? Evidence from China

Wang,

Li,

Liu

2024

Applied Energy

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How can firms' transition to a low-carbon economy affect the distance to default?

Cited by 17 publications

References 72 publications

The Impact of Climate Change Transition Innovations on the Default Risk Evidence from Low-Carbon Patents in China

The Impact of Climate Change Transition Innovations on the Default Risk Evidence from Low-Carbon Patents in China

Carbon performance and financial debt: Effect of formal and informal institutions

Does credit carbon exposure affect banks' profits and risks? Evidence from China

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