Nexus between carbon emission and financial performance moderated by environmental sensitivity: evidence from emerging economy

Raval, Avani; Desai, Rajesh; Bhatt, Kedar

doi:10.1504/ijmfa.2021.120516

Cited by 3 publications

(2 citation statements)

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“…Sensitive industries possess a high degree of visibility (Qureshi et al, 2020) and operate in an intensely controlled business environment (Garcia et al, 2017). Matsumura et al (2014) and Raval et al (2021) have concluded that the negative impact of carbon emission on firm performance has been augmented for sensitive industries. Furthermore, Kumari et al (2022) have also studied the role of industry sensitivity in their research on board characteristics and environmental disclosure and found that carbon sensitivity affects the results significantly.…”

Section: Moderating Role Of Carbon Sensitivity and Prior Environmenta...mentioning

confidence: 99%

“…Furthermore, the study adds value to the ongoing debate on ESG disclosure and firm performance by considering the sample of one of the largest and fastest-growing economies. Second, besides the overall impact, the study also analyzes the mitigating role of carbon sensitivity (Kumar and Firoz, 2018; Raval et al , 2021) and prior ESG disclosure (Lee et al , 2015) in determining the reaction of equity investors to the ESG regulation. Hence, the present research brings additional dimensions of research in the domain of ESG and firm performance.…”

Section: Introductionmentioning

confidence: 99%

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Nexus between mandatory ESG disclosure regulation and abnormal stock returns: a study of an emerging economy

Desai

2023

IJLMA

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Purpose This study aims to study the response of the stock market to the announcement of compulsory environmental, social and governance (ESG) disclosure regulation in the context of the Indian economy – one of the largest emerging economies. The study also examines the role of carbon sensitivity and pre-ESG disclosure. Design/methodology/approach Daily stock price data of 940 listed companies has been collected for 276 trading days to compute abnormal returns. The current study is based on event study methodology to analyze the announcement effect of disclosure regulations. Furthermore, to check the robustness of results, cross-sectional regression has been applied to correct for potential heterogeneity. Findings Results of the event study signify that the equity share market has reacted positively and significantly to the mandatory ESG disclosure regulation. Furthermore, the study also confirms the mitigating role of carbon sensitivity and pre-ESG disclosure as carbon nonsensitive (non predisclosure) firms have witnessed a more intense effect of regulation as compared to sensitive (predisclosed) corporations. Practical implications Current findings assist managers in understanding investor perception toward nonfinancial disclosures. Corporate managers can use disclosure as a tool to enhance the firm value and reduce information asymmetry by providing relevant information. Furthermore, policymakers can use the findings of present research to disseminate the advantages of adopting ESG disclosure practices thereby improving the transparency and governance among business firms. Originality/value To the best of the author’s knowledge, this study is the first to provide empirical evidence on the market response to compulsory ESG disclosure framework in the emerging context of India. Furthermore, considering the infancy stage of ESG research, the present research contributes to the body of knowledge by empirically testing the disclosure theories.

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Section: Moderating Role Of Carbon Sensitivity and Prior Environmenta...mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Nexus between mandatory ESG disclosure regulation and abnormal stock returns: a study of an emerging economy

Desai

2023

IJLMA

Self Cite

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Analysis of Moderation and Co-Moderation Effects on Waste Information Disclosure and Financial Performance Connection: A Way to Ensure Sustainable Business for SMEs

Bogdan,

Popa,

Rus

2024

Eastern European Economics

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Greenhouse Gas Emissions and Firm Performance in India: The Moderating Role of Environmental Sensitivity

Maji,

Saikia

2024

Jindal Journal of Business Research

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The study examines the impact of greenhouse gas emissions on the financial performance of India’s top 100 BSE-listed firms as of March 2022. It also studies the moderating role of environmental sensitivity in impacting this relationship. Greenhouse gas emissions and their components are measured in terms of their intensity per unit of sales, while financial performance is measured by Return on Assets and Tobin’s Q. Using random effects and interaction models, the analysis finds a negative relationship between emissions and financial performance, moderated by environmental sensitivity. The results highlight the need for stricter environmental regulations in India and encourage firms, especially in sensitive industries, to reduce emissions through renewable energy or improved efficiency. The study supports the “win–win” hypothesis, suggesting that reducing emissions can enhance firm performance. Future research could expand to include all listed Indian firms and those in other developing economies to gain a broader perspective.

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Nexus between carbon emission and financial performance moderated by environmental sensitivity: evidence from emerging economy

Cited by 3 publications

References 0 publications

Nexus between mandatory ESG disclosure regulation and abnormal stock returns: a study of an emerging economy

Nexus between mandatory ESG disclosure regulation and abnormal stock returns: a study of an emerging economy

Analysis of Moderation and Co-Moderation Effects on Waste Information Disclosure and Financial Performance Connection: A Way to Ensure Sustainable Business for SMEs

Greenhouse Gas Emissions and Firm Performance in India: The Moderating Role of Environmental Sensitivity

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