Corporate carbon performance and firm risk: Evidence from Asia-Pacific countries

Al-Fakir Al Rabab’a, Eltayyeb, Afzalur Rashid, Syed Shams and Sudipta Bose

Journal of Contemporary Accounting and Economics, 2024, vol. 20, issue 2

Abstract: This study examines the association between corporate carbon performance (CCP) and firm risk using a sample of 9,212 firm-year observations from 13 countries in the Asia-Pacific region over the period 2002–2021. We also examine the moderating role of the quality of country-level governance in the association between CCP and firm risk. We find that CCP is negatively associated with a firm’s total, idiosyncratic and systematic risk and that country-level governance quality accentuates the negative association between CCP and firm risk. We also find that country-level business culture, emissions trading schemes, climate change performance and attention to carbon emissions accentuate the negative association between CCP and firm risk. Given the growing demands from regulatory bodies for increased transparency on carbon performance, the insights gained from our research hold significant relevance for regulators, policy makers, investors, financial analysts, scholars and businesses.

Keywords: Carbon risk; Climate change; Carbon mitigation; Firm risk; Systematic risk; Idiosyncratic risk; Sustainable finance; Asia-Pacific (search for similar items in EconPapers)
JEL-codes: G32 M41 M49 Q56 Q57 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:20:y:2024:i:2:s1815566924000274

DOI: 10.1016/j.jcae.2024.100427

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