A growing body of literature finds that firm-level carbon emissions are associated with a number of adverse outcomes such as higher firm risk, lower firm value, higher option premiums to cover downside tail risk, and declines in future profitability. Given these adverse effects, this paper...

We document evidence that the CEOs who lead the firms that face higher climate change risk (CCR) receive higher equity-based compensation. Our finding is consistent with the compensating-wedge-differential theory and survives numerous robustness and endogeneity tests. The result is more...