Does green activity impact stock price crash risk? The role of climate risk

Dat Nguyen, Vuong Thao Tran and Dinh Hoang Bach Phan

Finance Research Letters, 2023, vol. 55, issue PA

Abstract: We investigate the effect of corporate green activity on the stock price crash risk. Using 2,222 US companies from 2002 to 2021, we find solid evidence that green activity is significantly related to lower firms’ price crash risk. Economically, a firm's price crash risk is reduced by 31.8% - 42.9% for participating in green activities. Moreover, the empirical results show that this negative effect is more substantial during high-climate risk periods. Our findings remain unchanged after controlling for endogeneity issues and several robustness tests.

Keywords: Green activity; Price crash risk; Climate risk (search for similar items in EconPapers)
JEL-codes: D22 G32 M14 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002519

DOI: 10.1016/j.frl.2023.103879

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