Firm carbon risk exposure, stock returns, and dividend payment

Sabri Boubaker (), Tonmoy Choudhury, Fakhrul Hasan and Duc Khuong Nguyen
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Sabri Boubaker: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School
Tonmoy Choudhury: SP Jain School of Global Management [Sydney]
Fakhrul Hasan: Newcastle University Business School, Northumbria University [Newcastle]

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Abstract: In this paper, we study whether a firm's carbon risk exposure plays a role in the relationship between dividend announcements and stock returns. Our results show that when investors hold disproportionately high carbon emitters with associated increased carbon risk, a positive relationship exists between a firm's carbon emissions and the association between the stock returns and dividend payment. If investors hold disproportionately high carbon emitters with the associated increased carbon risk stocks, the stock market reacts less positively (more negatively) to dividend increase (decrease) announcements. At the same time, if firms under-price their carbon risk, the stock market reacts less positively (more negatively) to dividend increase (decrease) announcements.

Keywords: Carbon emission; Dividend; Stock return; Climate change (search for similar items in EconPapers)
Date: 2024-03-28
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Published in Journal of Economic Behavior and Organization, 2024, May (221), pp.248-276. ⟨10.1016/j.jebo.2023.12.029⟩

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Journal Article: Firm carbon risk exposure, stock returns, and dividend payment (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04648626

DOI: 10.1016/j.jebo.2023.12.029

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