Finance and Carbon Emissions

Haas, Ralph De; Popov, Alexander

doi:10.2139/ssrn.3459987

Cited by 64 publications

(51 citation statements)

References 39 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Our paper is closest to the work of De Haas and Popov (2019) and Mesonnier (2019). De Haas and Popov studied the relationship between the structure of financial systems (measured as the share of stock market financing of total financing through credit and stock markets) and CO2 emissions.…”

Section: Introductionmentioning

confidence: 97%

Do banks fuel climate change?

Reghezza

Altunbaş

Marqués-Ibáñez

et al. 2022

Journal of Financial Stability

View full text Add to dashboard Cite

Section: Introductionmentioning

confidence: 97%

Do banks fuel climate change?

Reghezza

Altunbaş

Marqués-Ibáñez

et al. 2022

Journal of Financial Stability

View full text Add to dashboard Cite

“…Second, one may question our focus on public firms and stock markets. Our choice is commanded by the evidence that private firms are shown to be less likely to pollute than public firms (Shive & Forster, 2020), and equity markets exert “a genuine cleansing effect on polluting industries” (De Haas & Popov, 2019: 3). Finally, we measure clean technology as a dummy variable (see also Brahmana & Kontesa, 2021).…”

Section: Discussionmentioning

confidence: 99%

“…By contrast, in columns ( 3) and ( 6), we run panel regressions as per Petersen (2009) However, as argued in Section 2 of this study there is cause for concern when the researcher systematically imposes linearity in the emissions-valuation relationship. This is all the more problematic in light of the well-documented inverted U-shaped nature of the income-pollution relationship in the environmental Kuznets curve literature (De Haas & Popov, 2019;e.g., List & Gallet, 1999;Millimet et al, 2003). To probe deeper into the nature of the relationship at stake, we allow for a flexible functional form by including quadratic terms of our carbon emissions measures.…”

Section: Carbon Emissions and Future Market Valuations: Fama And Macb...mentioning

confidence: 99%

Do investors care about carbon emissions under the European Environmental Policy?

Mama

Mandaroux

2021

Bus Strat Env

View full text Add to dashboard Cite

We explore the extent to which cross-sectional differences in carbon dioxide emissions matter for future valuations of European firms regulated under the European Union Trading Scheme (EU ETS). Counterintuitively, we find that firm-level emissions share a robust concave relationship with future market valuations. Initially, market valuations increase in emissions potentially because emissions are considered essential for normal production processes; however, the valuation premium decreases and becomes negative beyond a threshold of emissions due to looming regulatory and transition risks. Firms in the lower quartile of emissions trade at an average premium of 2.42%, against a 20.78% discount in the upper quartile (the peak is 3.85%). Importantly, the concave relationship obtains only in smaller firms with lower analyst coverage and lower institutional ownership, and the predictive power of emissions is limited to firms with no reported investments in clean technology. Therefore, policymakers might consider promoting the development and diffusion of green technologies.

show abstract

“…Second, investments in cleaner technology and innovation discourage the use of debt because of the lower NPV from these replacement investments (Lemmon & Zender, 2019) and the higher marginal costs of riskier and long‐term horizon low‐carbon investments (Berrone, Fosfuri, & Gelabert, 2013). Therefore, our expectation is that large listed firms, under pressure to closely follow environmental regulations (given the supervision of regulatory authorities and stakeholders) (De Haas & Popov, 2019), prefer internally generated funds over debt during the maturity stage. Higher liquidity is used to amortize debt to avoid the control of creditors, and additional debt is likely to be costlier or unavailable because of the lower NPV of replacement investments.H3 When liquidity increases, firms with higher carbon performance obtain less debt (or amortize more debt) during maturity than during growth.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

How does a firm's life cycle influence the relationship between carbon performance and financial debt?

2021

View full text Add to dashboard Cite

In a progressively more stringent regulatory context concerning greenhouse gas emissions derived from a growing awareness of how economic activity affects our environment, this study analyzes how the firm's life cycle affects the relationship between carbon performance and financial debt. Using panel data on a sample of European listed firms during the 2005-2018 period, we find evidence suggesting that firms with better carbon performance have greater access to external financing during their growth stages and lesser access during maturity, although it has no effect during the shake-out stage. Furthermore, carbon performance has a strong positive effect during growth, maturity, and shake-out when firms need to finance additional tangible investments. We also find that the negative relationship between liquidity and debt is reversed during innovative stages for firms with better carbon performance. Our results are robust to the use of alternative measures of life cycle stages and to the consideration of industrial, legal, and cultural contexts.

show abstract

Finance and Carbon Emissions

Cited by 64 publications

References 39 publications

Do banks fuel climate change?

Do banks fuel climate change?

Do investors care about carbon emissions under the European Environmental Policy?

How does a firm's life cycle influence the relationship between carbon performance and financial debt?

Contact Info

Product

Resources

About