Carbon assurance, corporate capital structure, and debt maturity: Global evidence

Abdullah Bugshan, Faisal Alnori, Walid Bakry () and Rina Datt

Economics Letters, 2024, vol. 245, issue C

Abstract: This study used a cross-country sample of firms from 47 nations that participated in the Carbon Disclosure Project (CDP) questionnaire over the years 2011 and 2020, to examine whether the verification of carbon emissions information by an independent third party affects corporate capital structure and debt maturity decisions. Using alternative methods and robustness checks, we explore that carbon assurance importantly shapes both corporate capital structure and debt maturity. In particular, firms that are involved in independent carbon assurance have significantly higher leverage in their capital structure compared to non-assured firms. Further, assured firms have better access to long-term debt compared to non-assured firms. The outcomes of this study are attributed to the notion that the verification of carbon information increases the creditability of a firm's voluntary reporting and reduces its informational asymmetry between corporations and lenders.

Keywords: Capital structure; Debt maturity; leverage; carbon assurance; sustainability (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:245:y:2024:i:c:s0165176524005512

DOI: 10.1016/j.econlet.2024.112067

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