Firm carbon risk exposure, stock returns, and dividend payment

Sabri Boubaker, Tonmoy Choudhury, Fakhrul Hasan, Duc Khuong Nguyen*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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.
Original languageEnglish
Pages (from-to)248-276
Number of pages29
JournalJournal of Economic Behavior and Organization
Volume221
Early online date25 Mar 2024
DOIs
Publication statusE-pub ahead of print - 25 Mar 2024

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