Climate change performance and financial distress

Alshahrani, Faisal; Eulaiwi, Baban; Duong, Lien; Taylor, Grantley

doi:10.1002/bse.3298

Cited by 16 publications

(10 citation statements)

References 131 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Financial leverage is measured by dividing total liabilities by equity and is denoted as “ FL ”. Long-term borrowing level is measured by dividing long-term debt by total assets and is denoted as “ LTBL ” (Huynh et al ., 2020; Alshahrani et al ., 2022).…”

Section: Methodsmentioning

confidence: 99%

“…Prior studies have shown a link between asset profitability (ROA) and environmental disclosure (Ben-Amar et al. , 2017; Alshahrani et al ., 2022). Akbaş and Canikli (2018) find that the return on assets ratio of firms listed in the BIST100 index had a significantly positive effect on their voluntary participation in CDP reporting in Turkey between 2014 and 2016.…”

Section: Methodsmentioning

confidence: 99%

“…Long-term borrowing level is measured by dividing long-term debt by total assets and is denoted as "LTBL" (Huynh et al, 2020;Alshahrani et al, 2022).…”

Section: Research Design 41 Research Datamentioning

confidence: 99%

“…Moreover, Lemma et al (2021) show for S&P 500 companies from 2015 to 2019 that the share of long-term credit used by companies is positively associated with their commitment to climate change. Another study is by Alshahrani et al (2022), who look at the nonfinancial companies of the 300 largest companies listed on the ASX from 2008 to 2019. The OLS fixed effects regression analysis shows that CDP is positively related to financial distress.…”

Section: Corporate Climate Change Disclosuresmentioning

confidence: 99%

“…Results of theHausman test disclosures. Furthermore,Alshahrani et al (2022) study the Australian Securities Exchange (ASX) listed nonfinancial firms between the years 2008 and 2019. Ordinary least squares regression analysis with fixed effects results that higher levels of climate change disclosures being related to lower levels of leverage.…”

mentioning

confidence: 99%

See 4 more Smart Citations

Corporate climate change disclosures and capital structure strategies: evidence from Türkiye

Gahramanova,

Kutlu Furtuna

2023

JCMS

View full text Add to dashboard Cite

PurposeThere has been an increase in research examining whether and how companies disclose climate change impacts and how these disclosures influence capital structure strategies in recent years. However, prior literature has generally focused on developed countries. This paper proposes to examine the impact of voluntary climate change disclosures on corporate financing decisions in an emerging economy.Design/methodology/approachThe dataset includes 335 firm-year observations listed in the Borsa Istanbul (BIST) 100 manufacturing industry firms that participated in the Carbon Disclosure Project (CDP) questionnaire from 2016 to 2020, characterized by high public awareness of greenhouse gas emissions in Turkey. To accomplish this aim, two models have been constructed that link capital structure strategies with voluntary corporate climate change disclosures while controlling for firm-level attributes in terms of size, profitability, market value and free float ratio (FFR).FindingsThe significant and negative relationship between the voluntary disclosure of climate-related activities and long-term borrowing is consistent with the arguments that companies with high commitments are unlikely to reduce default risk in emerging markets. This paper also provides empirical evidence that the high size and the level of low profitability magnify this relationship between CDP and financial leverage.Originality/valueThe Paris Agreement seems to be a significant point where corporate lenders have become aware of the commitment of policymakers to fight climate change. The results have significant implications for both managerial strategies and environmental regulatory policy-making issues. In addition, the findings shed light on the strategic behavior of managers in the consideration of climate change risks and related transparency.

show abstract

Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

“…Long-term borrowing level is measured by dividing long-term debt by total assets and is denoted as "LTBL" (Huynh et al, 2020;Alshahrani et al, 2022).…”

Section: Research Design 41 Research Datamentioning

confidence: 99%

Section: Corporate Climate Change Disclosuresmentioning

confidence: 99%

mentioning

confidence: 99%

See 3 more Smart Citations

Corporate climate change disclosures and capital structure strategies: evidence from Türkiye

Gahramanova,

Kutlu Furtuna

2023

JCMS

View full text Add to dashboard Cite

show abstract

Climate transition risk and enterprise default probability

Sun,

He,

Cheng

et al. 2024

Bus Strat Env

View full text Add to dashboard Cite

Preventing and controlling the risk of enterprise default is an important way to maintain financial stability. When mitigating and adapting to climate change, it is important to study whether climate transition risk affects the probability of enterprise default. This article systematically analyzes data for Chinese‐listed companies from 2000 to 2019 and finds that climate transition risk significantly increases enterprise default probability (EDF). In addition, pilot carbon emission trading schemes and national carbon emission trading increase this effect. Financing constraints and profitability act as transmission channels; the transmission path, in turn, is influenced by the enterprise environment, social, and governance (ESG) factors and executive compensation. Excellent enterprise ESG performance can lower the positive impact of climate transition risk on EDF. However, higher executive compensation has the opposite effect: high compensation is associated with higher risk. When considering different business types, climate transition risk is more likely to increase the default probability of small assets or non‐state‐owned enterprises. This study helps describe the internal relationship between climate transition risk and EDF, and provides insights to better prevent and address the problem of enterprise debt default caused by climate transition risk.

show abstract

Climate risk and trade credit financing: Evidence from China

Chen,

Guo,

Geng

et al. 2024

Int. J Fin Econ

View full text Add to dashboard Cite

Using A‐share listed firms from 2009 to 2020 as a research sample, this study constructs firm‐level climate risk through textual analysis to examine whether and how corporate climate risk affect trade credit financing. The empirical results show that increased climate risk inhibits the level of trade credit financing of firms. The results are more prominent for those enterprises without government‐enterprise linkages and firms in cities with high levels of environmental regulation intensity and low levels of city trust. Furthermore, mechanism tests suggest that operational risk and information asymmetry are the main channels affecting the above relationships. In addition, we find that the negative impact of climate risk on trade credit financing will weaken firm value. This paper enriches the research on the impact of climate risk on microeconomic agents and provides new perspectives to alleviate corporate financing constraints.

show abstract

Climate change performance and financial distress

Cited by 16 publications

References 131 publications

Corporate climate change disclosures and capital structure strategies: evidence from Türkiye

Corporate climate change disclosures and capital structure strategies: evidence from Türkiye

Climate transition risk and enterprise default probability

Climate risk and trade credit financing: Evidence from China

Contact Info

Product

Resources

About