Firm‐Level Climate Change Risk and CEO Equity Incentives

Hossain, Ashrafee Tanvir; Masum, Abdullah‐Al; Saadi, Samir; Benkraiem, Ramzi; Das, Nirmol

doi:10.1111/1467-8551.12652

Cited by 52 publications

(40 citation statements)

References 152 publications

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“…A fledgling but constantly growing body of research has developed to examine the effects of climate risk on the outcomes, strategies and actions of corporations (Matsumura et al, 2014;Bolton and Kacperczyk, 2021;Huynh and Xia, 2021;Chava, 2014;Javadi and Masum, 2021;Hossain et al, 2022;Choi et al, 2020;Bolton and Kacperczyk, 2021;Painter, 2020;Hong et al, 2019;Heo, 2021).In this article, we uniquely contribute to this important area of the literature by shedding light on the effect of firm-specific climate change exposure on corporate innovation through the lens of corporate culture. Our novel measures for climate change exposure and corporate culture are generated by a powerful textual analysis of earnings conference calls and represent a critical breakthrough in how firm-level exposure and corporate culture are quantified.…”

Section: Discussionmentioning

confidence: 99%

“…According to a large body of recent research on climate risk related to corporate outcomes, climate risk places businesses in unfavorable situations with reduced firm valuations, negative stock market reactions and higher costs of capital (Matsumura et al , 2014; Bolton and Kacperczyk, 2021; Huynh and Xia, 2021; Chava, 2014; Javadi and Masum, 2021; Hossain et al , 2022). Recent research reports that climate change does, in fact, expose companies to large additional vulnerabilities.…”

Section: Pertinent Research and Hypothesis Developmentmentioning

confidence: 99%

“…As the effects of climate change become increasingly apparent, an intense debate has arisen over whether capital markets are paying sufficient attention to the financial repercussions (Sautner et al , 2023). Consequently, a nascent, albeit quickly expanding, body of research has emerged to study the effects of climate risk on corporate outcomes, practices and actions (Matsumura et al , 2014; Bolton and Kacperczyk, 2021; Huynh and Xia, 2021; Chava, 2014; Javadi and Masum, 2021; Hossain et al , 2022; Choi et al , 2020; Painter, 2020; Heo, 2021). Clearly, this is a crucial area of the contemporary literature.…”

Section: Introductionmentioning

confidence: 99%

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Climate change and corporate culture of innovation: evidence from earnings conference calls

Ongsakul,

Chintrakarn,

Jiraporn

et al. 2024

PAR

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Purpose Exploiting novel measures of climate change exposure and corporate culture generated by a powerful textual analysis of earnings conference calls, this study aims to explore the effect of firm-specific climate change exposure on corporate innovation through the lens of corporate culture. Design/methodology/approach The authors apply the standard regression analysis as well as a variety of sophisticated techniques, namely, propensity score matching, entropy balancing and an instrumental-variable analysis with multiple alternative instruments. Findings The authors find that more exposure to climate change risk results in more innovation, as indicated by a significantly stronger culture of innovation. The findings are consistent with the notion that firms more exposed to climate change risk are pressed to be more innovative to adapt to the numerous changes caused by climate change. Finally, the authors also find that the effect of firm-level exposure on innovation is considerably less pronounced during uncertain times. Originality/value The authors are among the first studies to take advantage of a novel measure of firm-specific exposure to climate change and investigate how climate change exposure influences an innovative culture. Since climate change is a timely issue, the findings offer important implication to several stakeholders, such as shareholders, executives and investors in general.

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Section: Discussionmentioning

confidence: 99%

Section: Pertinent Research and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Climate change and corporate culture of innovation: evidence from earnings conference calls

Ongsakul,

Chintrakarn,

Jiraporn

et al. 2024

PAR

View full text Add to dashboard Cite

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“…To ensure that the scope of the search was clearly defined, only studies that focused on the concept of environmental sustainability, including firm's environmental performance and reporting, were included. The concept of environmental sustainability and its association with companies' executives have been referred to as climate change, green innovation, environmental, social and governance (ESG), GHG emissions and carbon performance (Balasubramanian et al, 2021; Chithambo et al, 2020; Hossain et al, 2022; Luo et al, 2021; Ren et al, 2021; Villalba‐Ríos et al, 2022) in literature. The steps involved in the inclusion and exclusion process are summarized in Figure 1.…”

Section: Methodsmentioning

confidence: 99%

Chief Executive Officer (CEO) and corporate environmental sustainability: A systematic literature review and avenues for future research

Mahran,

Elamer

2023

Bus Strat Env

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Environmental sustainability has gained significant importance for organizations, highlighting the crucial role of business leaders in addressing environmental degradation. However, the connection between chief executive officer (CEO) characteristics and environmental sustainability remains understudied in academic literature. Understanding this relationship is crucial, considering the significance of environmental sustainability in organizational strategies. This paper presents the first systematic literature review (SLR) on this topic, aiming to identify gaps and opportunities for future research. The SLR analysed 139 studies on the CEO–environmental sustainability relationship. The findings indicate a recent increase in research activity, particularly peaking in 2022 and focusing on China and the United States. Most studies employed upper echelons theory and examined the influence of CEO demographic characteristics on environmental performance. However, less attention has been given to CEO psychological traits, such as personality and ethical leadership, and environmental disclosure. Furthermore, qualitative aspects of environmental disclosure, including reporting tone, readability and specificity, have received less attention. The findings offer valuable insights for academics, practitioners and policymakers. Recommendations for future research include exploring the impact of CEO psychological traits and environmental disclosure on a firm's environmental sustainability. Additionally, studying cross‐country and cross‐industry differences in this relationship is encouraged. This study makes a significant contribution to the field by shedding light on the crucial and relevant topic of environmental sustainability and its association with CEO characteristics, providing valuable insights to guide future research and inform decision‐makers.

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“…The exposure can vary depending on the sector, geographic location and the company’s preparedness and adaptation strategies. Ample anecdotal evidence reveals that climate change could be identified as a major source of concern in influencing financial stability, affecting economic activities and threatening future growth (Hossain et al , 2022; Ji et al , 2021). Businesses in different sectors are directly or indirectly impacted by various climate risks, notably those generated by physical damages, supply chain disruptions, carbon prices and transitional and liability risks (Hong et al , 2020; Wang et al , 2020).…”

Section: Introductionmentioning

confidence: 99%

On the foundations of firm climate risk exposure

Shahrour,

Arouri,

Lemand

2023

RAF

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Purpose This study aims to address gaps and limitations in the literature regarding firms’ exposure to climate risks. It reviews existing research, proposes new theoretical frameworks and provides directions for future studies. Design/methodology/approach A bibliometric and systematic approach is used to review the literature on firms’ climate risk exposure. The study examines current theoretical frameworks and suggests additional ones to enhance understanding. Findings This study contributes to the climate finance literature by offering a comprehensive overview of firms’ climate risk exposure and used theories. It emphasizes the urgent need to tackle climate change and the crucial role of firms in climate risk management. The study supports the advancement of sustainability policies and highlights the importance of understanding firms' climate risk exposure. Practical implications This study informs the development of climate risk management strategies within firms and supports the implementation of effective sustainability policies. Social implications Addressing climate risks can contribute to a more sustainable and resilient future for society as a whole. Originality/value This study provides a roadmap for future research by identifying gaps and limitations in the literature. It introduces new perspectives and theoretical frameworks, adding original insights to the field of study.

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Firm‐Level Climate Change Risk and CEO Equity Incentives

Cited by 52 publications

References 152 publications

Climate change and corporate culture of innovation: evidence from earnings conference calls

Climate change and corporate culture of innovation: evidence from earnings conference calls

Chief Executive Officer (CEO) and corporate environmental sustainability: A systematic literature review and avenues for future research

On the foundations of firm climate risk exposure

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