Carbon emissions and credit ratings
Md Safiullah,
Md Nurul Kabir and
Mohammad Dulal Miah
Energy Economics, 2021, vol. 100, issue C
Abstract:
We examine the impact of firm-level carbon emissions on credit ratings, drawing on a sample of 3116 firm-year observations over the period 2004–2018 in the context of U.S. We find a negative, economically meaningful impact of carbon emissions on credit ratings. This finding remains robust when we employ the instrumental variable approach, difference-in-differences approach, and propensity score matching estimates to address potential endogeneity concerns. Our channel analysis reveals that firms that emit high carbon face higher cash flow uncertainty, which in turn, results in lower credit ratings.
Keywords: Carbon emissions; Credit ratings; Climate change; Cashflow uncertainty (search for similar items in EconPapers)
JEL-codes: G14 G35 M14 Q51 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (27)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:100:y:2021:i:c:s014098832100236x
DOI: 10.1016/j.eneco.2021.105330
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