Global Climate Risk Index and Firm Performance: Evidence from Turkish Firms

Cavlak, Hakan; Cebeci, Yasin; Güneş, Necati; Tan, Ömer Faruk

doi:10.1007/978-981-33-6636-7_13

Cited by 2 publications

(1 citation statement)

References 106 publications

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“…This implies that climate change has significant impact on the capital structure of firms. Several studies also demonstrate that there is significant relationship between climate change (risk), firm performance (Michalisin and Stinchfield, 2010; Cavlak et al , 2021) and cost of capital (Kling et al , 2021).…”

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confidence: 99%

Environmental performance and cost of finance: evidence from emerging markets

Temiz

2022

SAMPJ

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Purpose This study aims to investigate the effects of environmental performance (EP) of firms and its pillars on both cost of debt and equity (COF) in emerging market context. Design/methodology/approach This study uses 4,152 firm-year observations covering the years 2015–2019 from 17 emerging market countries. Data are obtained from ASSET4 and Datastream databases. OLS method with country, industry and year fixed effects are utilized in the main analysis of the study. Several robustness tests including 2SLS IV method are performed to test the sensitivity of the results. Findings The results suggest that aggregate EP of firms has reducing effects on both cost of debt and equity. All EP pillars have negative effects on the cost of debt while only emission performance has negative significant impact on cost of equity. This reveals that the effects of EP on cost of equity is mostly driven by emission performance of firms. Practical implications Given differences between emerging and developed countries in terms of environmental regulations, infrastructure and technology, it is suggested that regulatory bodies and governments urge firms to implement environmentally friendly policies. Besides, implications for emerging markets for capturing more shares from responsible investments are provided. Social implications Although the adoption and implementation of environmentally-friendly policies are costly, improved environmental performance has financial advantages, including lower COF for firms. Therefore, firms would benefit from improving their EP in order to protect the nature, as well as to enjoy the economic benefits of better EP. Originality/value This study confirms that improved environmental performance has financial advantages for firms in emerging markets, such as lower COF.

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Section: Introductionmentioning

confidence: 99%

Environmental performance and cost of finance: evidence from emerging markets

Temiz

2022

SAMPJ

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Impact of climate risk on financial performance – evidence from select energy companies from select G-20 countries

Bauri,

Mondal,

Fatma

2024

IJESM

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Purpose The recent meeting of G-20 world leaders, held in New Delhi, in 2023, highlighted that the physical effect of climate change has considerable macro-economic costs at the national and global levels and they have also pledged to accelerate the clean, sustainable and inclusive energy transition along a variety of pathways. Climate change could pose various emerging risks to the firm’s operational and financial activities, specifically for those which are belonging to the energy sector. Thus, this study aims to investigate the impact of climate risks on the financial performance of select energy companies from G-20 countries. Design/methodology/approach The study considered 48 energy companies from G-20 countries as the sample for the period of 2017 to 2021. To measure the climate change-related physical risks, the study has considered the ND-GAIN climate vulnerability score and the firm’s financial performance has been measured by return on assets, return on equity, return on capital used and price-to-book ratio. To examine the impact of climate risks on the financial performance of the sample companies, the authors have used pooled ordinary least squares (OLS) and fixed/random effect regression analysis and required data diagnosis tests are also performed. Findings The empirical results suggested that climate risks negatively impacted the financial performance of the sample companies. The market performances of the firms are also being impacted by the physical climate change. The results of panel data regression analysis also confirmed the robustness of the empirical results derived from the pooled OLS analysis suggesting that firms that operated in a less climate-risky country, financially performed better than the firms that operated in a more climate-risky country. Practical implications The paper has significant practical implications like it could be helpful for the policymakers, investors, suppliers, researchers and other stakeholders in developing deeper insights about the impact of climate risks on the energy sectors from an international perspective. This study may also help the policymakers in developing policies for the management of climate risk for the energy sector. Originality/value This study adds insights to the existing literature in the area of climate risks and firm’s financial performance. Moreover, this may be the first study that attempts to evaluate the impact of climate risks on the financial performance of select energy companies from the G-20’s perspective.

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Global Climate Risk Index and Firm Performance: Evidence from Turkish Firms

Cited by 2 publications

References 106 publications

Environmental performance and cost of finance: evidence from emerging markets

Environmental performance and cost of finance: evidence from emerging markets

Impact of climate risk on financial performance – evidence from select energy companies from select G-20 countries

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