Open Access
'Carbon' boards and transition risk : explicit and implicit exposure implications for total stock returns and dividends payouts
Loading...
Files
Carbon_boards_2024.pdf (954.18 KB)
Full-text in Open Access, Published version, OnlineFirst
License
Attribution 4.0 International
Cadmus Permanent Link
Full-text via DOI
ISBN
ISSN
1873-6181; 0140-9883
Issue Date
Type of Publication
Keyword(s)
LC Subject Heading
Other Topic(s)
EUI Research Cluster(s)
Initial version
Published version
Succeeding version
Preceding version
Published version part
Earlier different version
Initial format
Citation
Energy economics, 2024, Vol. 137, Art. 107779, OnlineFirst
Cite
MAZZARANO, Matteo, GUASTELLA, Gianni, PAREGLIO, Stefano, XEPAPADEAS, Anastasios, BORGHESI, Simone, ‘Carbon’ boards and transition risk : explicit and implicit exposure implications for total stock returns and dividends payouts, Energy economics, 2024, Vol. 137, Art. 107779, OnlineFirst - https://hdl.handle.net/1814/77118
Abstract
Transition risk disclosure facilitates investors' understanding of the potential company-level risks associated with a low-carbon transition. Among the others, stricter regulations could undermine companies' financial performances, affecting operations costs and revenues and their impact being proportional to the business carbon intensity. Transition risk disclosure takes two forms. One is a textual description of transition risk in compulsory and voluntary non-financial disclosure. The other is the disclosure of carbon emissions and intensity, which is implicitly associated with transition risk exposure. We empirically assess the impact of the two transition risk measures on shareholder returns to test the “carbon premium” hypothesis. We consider shareholder return as the sum of capital gain and dividend paid and analyse the impact of transition risk on both. Evidence supports the “carbon premium” hypothesis but suggests such a premium is transferred to shareholders primarily via dividend payouts. One possible explanation consistent with this evidence is that boards in highly polluting companies use dividends to compensate investors for the relatively lower capital gain, dissuading them from divesting due to low returns, stigmatisation effects and regulatory risks.
Table of Contents
Additional Information
Published online: 23 July 2024