Firm carbon risk exposure, stock returns, and dividend payment

Sabri Boubaker, Tonmoy Choudhury, Fakhrul Hasan and Duc Khuong Nguyen

Journal of Economic Behavior & Organization, 2024, vol. 221, issue C, 248-276

Abstract: In this paper, we study whether a firm's carbon risk exposure plays a role in the relationship between dividend announcements and stock returns. Our results show that when investors hold disproportionately high carbon emitters with associated increased carbon risk, a positive relationship exists between a firm's carbon emissions and the association between the stock returns and dividend payment. If investors hold disproportionately high carbon emitters with the associated increased carbon risk stocks, the stock market reacts less positively (more negatively) to dividend increase (decrease) announcements. At the same time, if firms under-price their carbon risk, the stock market reacts less positively (more negatively) to dividend increase (decrease) announcements.

Keywords: Carbon emission; Dividend; Stock return; Climate change (search for similar items in EconPapers)
JEL-codes: G32 G35 G38 Q54 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Firm carbon risk exposure, stock returns, and dividend payment (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:221:y:2024:i:c:p:248-276

DOI: 10.1016/j.jebo.2023.12.029

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