Corporate risk and greenhouse gas emissions: evidence from Korea

Sang Joon Kim and Hohyun Kim

Applied Economics Letters, 2023, vol. 30, issue 16, 2252-2258

Abstract: Concerns regarding climate changes and greenhouse gas (GHG) emissions have been growing in recent years. Nonetheless, firms are claiming their business burdens in GHG reduction. This study examines whether and how corporate risk is associated with GHG emissions. The previous literature suggests two opposing hypotheses regarding the association. Firms may invest in environmental issues only when firms do not face severe risks in the market. In contrast, environmental efforts could be made strategically to win market competition. By using a firm-level GHG emission dataset in Korea, we find that firm- and market-level risks are positively associated with GHG emissions, supporting the former hypothesis. This result is robust to several measures of corporate risks and GHG emissions. This study provides policy implications related to GHG emissions reduction.

Date: 2023
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DOI: 10.1080/13504851.2022.2096852

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