Do corporate carbon emissions affect risk and capital costs?
Journal article
Arian, Adam Gholami and Sands, John. (2024). Do corporate carbon emissions affect risk and capital costs? International Review of Economics and Finance. 93(Part A), pp. 1363-1377. https://doi.org/10.1016/j.iref.2024.04.018
Authors | Arian, Adam Gholami and Sands, John |
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Abstract | This study explores the impact of corporate carbon emissions on idiosyncratic risk and capital costs. Leveraging a dataset comprising 1016 company-year observations from Australian-listed companies over the period 2007 to 2020, our panel regression analysis reveals significant associations. We find that companies with higher carbon emissions experience elevated idiosyncratic risk, contributing to increased capital costs in both debt and equity markets. Our results remain robust after using alternative model specifications, accounting for the diverse nature of corporate carbon performance among industries, shaped by unique industrial factors. These results highlight the significance of carbon emissions pricing within financial markets and emphasize the importance of standardized corporate carbon disclosure in enhancing market efficiency, facilitating more accurate valuation, and guiding resource allocation in the broader economy. |
Keywords | Corporate carbon emissions ; Corporate risk ; Emissions intensity; Cost of capital (COC); Market efficiency |
Year | 01 Jan 2024 |
Journal | International Review of Economics and Finance |
Journal citation | 93 (Part A), pp. 1363-1377 |
Publisher | Elsevier Ltd. (UK) |
ISSN | 1059-0560 |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.iref.2024.04.018 |
Web address (URL) | https://www.sciencedirect.com/science/article/pii/S1059056024002715?via%3Dihub |
Open access | Open access |
Research or scholarly | Research |
Page range | 1363-1377 |
Publisher's version | License File Access Level Open |
Output status | Published |
Publication dates | |
Online | 07 Apr 2024 |
Publication process dates | |
Accepted | 03 Apr 2024 |
Deposited | 30 Aug 2024 |
Additional information | © 2024 The Author(s). Published by Elsevier Inc. |
This is an open access article under the CC BY license | |
Place of publication | Australia |
https://acuresearchbank.acu.edu.au/item/90x71/do-corporate-carbon-emissions-affect-risk-and-capital-costs
Download files
Publisher's version
OA_Arian_2024_Do_corporate_carbon_emissions_affect_risk.pdf | |
License: CC BY 4.0 | |
File access level: Open |
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