An influential emerging literature, led by Bolton and Kacperczyk (2021a), documents strong correlations between unscaled raw emissions and both stock returns and operating performance. We re-examine that data, using a sample of 2,729 U.S. firms from 2005-2019, and conclude that the associations...

The ever-increasing attention towards climate change has led to investigate the economic and financial impact of environmental risk. In this scenario, we aimed at investigating the relationship between a specific component of environmental risk, namely the so-called carbon risk, and the cost of...

This paper examines the role of financial frictions on the trading of emission allowances. Based on a wide international sample of firms and data from the European Union Emission Trading System (the most liquid and developed in the world) we document that firms with liquidity needs are...

Investors and companies are increasingly aware that climate change and its associated needs for reducing CO2 emissions are likely to impact structurally many areas of the economy. This paper offers a contribution to understand these impacts on companies' strategy, by studying management systems....

The last decade has experienced an important expansion of openness on firm environmental practices and an increased level of environmental disclosure. An open question remains, however, on the extent to which firms fully commit to the principle of widespread disclosure of their impact on the...

This paper aims to investigate the environmental strategy on the choice of a firm's political reaction in response to a proposed Emissions Trading Scheme (ETS) in New Zealand. Using sample of 33 firms in four industries that are affected by the introduction of the ETS, this study found a...

This study examines the valuation relevance of greenhouse gas emissions under the European Union Carbon Emission Trading Scheme (EU ETS). We posit that carbon emissions affect firm valuation only to the extent that a firm's emissions exceed its carbon allowances under a cap and trade system and...

We investigate alternative hypotheses for a company's choice for an intensity-only (carbon emissions relative to sales, production, etc.) versus an absolute carbon emissions goal. The hypotheses include: (1) a high growth firm hypothesis whereby high growth companies select an intensity goal, to...

What are the conditions under which private, voluntary certification programs like the Rainforest Alliance or Fairtrade can successfully promote environmental and social standards? We propose that the efficacy of a certification program depends on three variables: its sustainability standards,...