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Firm carbon risk exposure, stock returns, and dividend payment

Author

Listed:
  • Sabri Boubaker

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

  • Tonmoy Choudhury

    (SP Jain School of Global Management [Sydney])

  • Fakhrul Hasan

    (Newcastle University Business School, Northumbria University [Newcastle])

  • Duc Khuong Nguyen

    (PULV - Pôle Universitaire Léonard de Vinci)

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.

Suggested Citation

  • Sabri Boubaker & Tonmoy Choudhury & Fakhrul Hasan & Duc Khuong Nguyen, 2024. "Firm carbon risk exposure, stock returns, and dividend payment," Post-Print hal-04648626, HAL.
    • Handle: RePEc:hal:journl:hal-04648626
    DOI: 10.1016/j.jebo.2023.12.029
    as

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