Unmasking the carbon conundrum: How emissions impact stock price crash risk

Vuong Thao Tran, Dinh Hoang Bach Phan, Chwee-Ming Tee and Dat Thanh Nguyen

Finance Research Letters, 2024, vol. 64, issue C

Abstract: This study examines the influence of carbon risk on stock price crash risk. Using a comprehensive dataset of 3,417 US companies from 2006 to 2021, we provide evidence that carbon risk is significantly linked to a higher crash risk for firms. Moreover, our findings suggest that this positive association is more pronounced during the Democratic presidency and to companies operating in carbon-intensive industries. The main results are consistent after conducting endogeneity and several robustness tests.

Keywords: Carbon risk; Carbon emission; Polluting firms; Stock price crash risk (search for similar items in EconPapers)
JEL-codes: D22 G32 Q56 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004732

DOI: 10.1016/j.frl.2024.105443

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