Predicting the Risk of High Carbon Emissions from Financial Ratios

Yang Yiwen, Hsu Shu-Han and Po-Keng Cheng ()
Additional contact information
Yang Yiwen: NTNU - National Taiwan Normal University
Hsu Shu-Han: NTUB - National Taipei University of Business
Po-Keng Cheng: Department of Finance and Cooperative Management, National Taipei University

Working Papers from HAL

Abstract: Firm-level carbon emissions, while directly measurable, are often reported with delays or incomplete information, particularly for firms not subject to mandatory disclosure. Understanding and predicting the risks of high carbon emissions is therefore essential for financial analysis in economies pursuing sustainability. This study investigates the relationship between carbon emissions and financial ratios using firm-level data from the Taiwan Economic Journal for the period 2005 to 2020. The empirical findings reveal that financial ratios can serve as effective predictors of high carbon emission risk, with clear industry-specific differences. While the relevant predictors differ across industries, our results suggest that the receivables-to-sales ratio may serve as a useful early-warning financial indicator for identifying firms at greater risk of high carbon emissions. Overall, the study develops a cost-effective and forward-looking early-warning mechanism that enables governments, investors, and companies to manage carbon-related risks by leveraging readily available financial information.

Keywords: early-warning system; risk of high carbon emission firms; financial ratios; logit model; probit model; Bayesian kernel machine regression model (search for similar items in EconPapers)
Date: 2026-01-27
Note: View the original document on HAL open archive server: https://hal.science/hal-05480723v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05480723v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05480723

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().