Relationship between Climate Change Risk and Cost of Capital

Park, Jeong hwan; Noh, Jung-Hee

doi:10.17549/gbfr.2018.23.2.66

Cited by 16 publications

(9 citation statements)

References 29 publications

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“…Additionally, this study focused on identifying potential solutions for improving blockchain adoption for the foodservice industry by addressing how negative associations with blockchain resistance can be minimized. Drawing on the stakeholder theory, “public pressures” and “climate change awareness” were investigated to assess their potential roles as moderators in mitigating the negative effect of “blockchain resistance” on “adoption intentions.” Pressures associated with internal and external stakeholders play important roles in leading organizations to go green (Hyatt and Berente, 2017; Noh, 2018). These findings are well supported in the current study, demonstrating the significant roles of internal and external stakeholders in weakening the negative relationship between blockchain resistance and adoption intentions.…”

Section: Discussionmentioning

confidence: 99%

Resistance to blockchain adoption in the foodservice industry: moderating roles of public pressures and climate change awareness

Jang

Yoo

Cho

2023

IJCHM

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Purpose Blockchain technology has created possibilities for environmental supply chain sustainability and climate protection. However, because of its early development stage, users tend to resist the adoption of this new technology. The purpose of this study is to investigate the effects of resistance on blockchain adoption intentions in the context of the foodservice industry. This study further explores if public pressures and climate change awareness could possibly weaken the negative relationships between blockchain resistance and adoption intentions. Design/methodology/approach Data were collected from managers and full-time employees in the foodservice industry, using an online research panel survey. A structural equation model was developed and tested to examine the hypothesized relationships. Additionally, a multi-group analysis was performed to test the moderating roles of public pressures and climate change awareness. Findings The findings from this study confirmed that foodservice employees’ characteristics, including traditional barriers, and blockchain technology factors, like perceived risk, are both significant in forming resistance to blockchain. This study also demonstrated the significant roles of internal and external stakeholders in weakening the negative associations between blockchain resistance and adoption intentions. Research limitations/implications This study recommends that foodservice companies address how to reduce their employees’ negative perceptions about changes imposed by blockchain adoption. This study also suggests the joint consideration of the pressures from internal and external stakeholders to provide continued insights into developing environmental practices for the foodservice industry. Originality/value This study extends the theoretical underpinning of the innovation resistance theory by incorporating the stakeholder theory as a strong foundation for understanding how external pressures and internal awareness may influence foodservice employees’ responses to the implementation of blockchain technology to mitigate climate change.

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Section: Discussionmentioning

confidence: 99%

Resistance to blockchain adoption in the foodservice industry: moderating roles of public pressures and climate change awareness

Jang

Yoo

Cho

2023

IJCHM

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“…Additionally, thanks to the improved environmental risk exposure, firms may take advantage of the cost of debt reduction and the increase of debt capacity with related tax benefits. Park and Noh (2018) focused on a sample of firms under the Target Management Scheme in Korea and analysed the relationship between climate change risk (measured in terms of GHG emissions and energy consumption) and the WACC. The authors found that companies with a higher risk linked to climate change, suffer from a higher cost of capital.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Park and Noh (2018) focused on a sample of firms under the Target Management Scheme in Korea and analysed the relationship between climate change risk (measured in terms of GHG emissions and energy consumption) and the WACC. The authors found that companies with a higher risk linked to climate change, suffer from a higher cost of capital.…”

Section: Literature Reviewmentioning

confidence: 99%

Does it pay to be environmentally responsible? Investigating the effect on the weighted average cost of capital

Mariani

Pizzutilo

Caragnano

et al. 2021

Corp Soc Responsibility Env

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This research aims at investigating the effect of firms' environmental policies on the weighted average cost of capital (WACC) in order to catch capital markets' reaction towards corporate environmental commitment and effectiveness in reducing carbon emissions. We refer to the European market and analysed a sample of companies listed on the Stoxx Europe 600 Index during the timeframe 2014–2018. Our results show that capital markets have become particularly sensitive to environmental issues and therefore reward environmentally virtuous firms with a lower after tax WACC. We also argue that this effect is prominent for both high emitting and low emitting industries.

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“…The aim of this work is to study whether climate risks significantly affect the systematic risk coefficient (beta) of companies operating in the oil and gas sector through the application of econometric models, as described earlier. The main reference articles that supported the definition of the models were Sharfman and Fernando (2008), Trinks et al (2017) and Park and Noh (2018).…”

Section: A the Model And Its Variationsmentioning

confidence: 99%

The impact of climate risks on the cost of capital of oil and gas companies

Bettega,

Goncalves,

de Souza

2024

Preprint

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In a context of energy transition and decarbonization, companies operating in the oil and gas sector may be more exposed to climate risks, both physical and transition related. This greater exposure may reflect in a higher cost of capital, given the risk of stranded assets, stigmatization of the sector and reduced funding. This paper seeks to study this hypothesis, applying econometric models to analyze whether climate risk, represented here by a Carbon Intensity metric (scope 1 and scope 2 greenhouse gas emissions per US$ of revenue), has a significant effect on the systematic risk coefficient (beta) of these companies. The results show that Carbon Intensity has a statistically significant positive effect on beta, contributing to the argument that greater climate risk can increase companies' systematic risk. According to the most robust model (Model 1), a 100% increase in Carbon Intensity generates a corresponding rise of 0.0608 in beta, everything else kept constant - an increase of 7.25% in relation to the average beta of the sample.

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Relationship between Climate Change Risk and Cost of Capital

Cited by 16 publications

References 29 publications

Resistance to blockchain adoption in the foodservice industry: moderating roles of public pressures and climate change awareness

Resistance to blockchain adoption in the foodservice industry: moderating roles of public pressures and climate change awareness

Does it pay to be environmentally responsible? Investigating the effect on the weighted average cost of capital

The impact of climate risks on the cost of capital of oil and gas companies

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