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Corporate carbon performance and firm risk: Evidence from Asia-Pacific countries

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  • Al-Fakir Al Rabab’a, Eltayyeb
  • Rashid, Afzalur
  • Shams, Syed
  • Bose, Sudipta

Abstract

This study examines the association between corporate carbon performance (CCP) and firm risk using a sample of 9,212 firm-year observations from 13 countries in the Asia-Pacific region over the period 2002–2021. We also examine the moderating role of the quality of country-level governance in the association between CCP and firm risk. We find that CCP is negatively associated with a firm’s total, idiosyncratic and systematic risk and that country-level governance quality accentuates the negative association between CCP and firm risk. We also find that country-level business culture, emissions trading schemes, climate change performance and attention to carbon emissions accentuate the negative association between CCP and firm risk. Given the growing demands from regulatory bodies for increased transparency on carbon performance, the insights gained from our research hold significant relevance for regulators, policy makers, investors, financial analysts, scholars and businesses.

Suggested Citation

  • Al-Fakir Al Rabab’a, Eltayyeb & Rashid, Afzalur & Shams, Syed & Bose, Sudipta, 2024. "Corporate carbon performance and firm risk: Evidence from Asia-Pacific countries," Journal of Contemporary Accounting and Economics, Elsevier, vol. 20(2).
    • Handle: RePEc:eee:jocaae:v:20:y:2024:i:2:s1815566924000274
    DOI: 10.1016/j.jcae.2024.100427
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    Keywords

    Carbon risk; Climate change; Carbon mitigation; Firm risk; Systematic risk; Idiosyncratic risk; Sustainable finance; Asia-Pacific;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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