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Dealing with Carbon Risk and the Cost of Debt: Evidence from the European Market

Author

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  • Fabio Pizzutilo

    (Department of Economics, Management and Business Law, University of Bari Aldo Moro, 70124 Bari, Italy)

  • Massimo Mariani

    (Department of Management, LUM Jean Monnet University, 70010 Casamassima (BA), Italy)

  • Alessandra Caragnano

    (Department of Management, LUM Jean Monnet University, 70010 Casamassima (BA), Italy)

  • Marianna Zito

    (Department of Management, LUM Jean Monnet University, 70010 Casamassima (BA), Italy)

Abstract

The ever-increasing attention towards climate change has led to investigate the economic and financial impact of environmental risk. In this scenario, we aimed at investigating the relationship between a specific component of environmental risk, namely the so-called carbon risk, and the cost of debt. This research is motivated by the fact that few studies have focused on the aforementioned relationship. We fill this gap by using a sample of companies listed on the Eurostoxx 600 Index. Our results evidence a positive relationship between carbon risk and cost of debt, providing a relevant contribution to the scarce existing literature on this topic.

Suggested Citation

  • Fabio Pizzutilo & Massimo Mariani & Alessandra Caragnano & Marianna Zito, 2020. "Dealing with Carbon Risk and the Cost of Debt: Evidence from the European Market," IJFS, MDPI, vol. 8(4), pages 1-10, October.
    • Handle: RePEc:gam:jijfss:v:8:y:2020:i:4:p:61-:d:427023
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    References listed on IDEAS

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    4. Zhang-Hangjian Chen & Xiang Gao & Apicha Insuwan, 2023. "Dynamic information spillover between Chinese carbon and stock markets under extreme weather shocks," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-12, December.
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    6. Massimo Mariani & Fabio Pizzutilo & Alessandra Caragnano & Marianna Zito, 2021. "Does it pay to be environmentally responsible? Investigating the effect on the weighted average cost of capital: Environmental commitment and the cost of capital," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1854-1869, November.
    7. Abdulaziz Mohammed Alsahlawi & Kaouther Chebbi & Mohammed Abdullah Ammer, 2021. "The Impact of Environmental Sustainability Disclosure on Stock Return of Saudi Listed Firms: The Moderating Role of Financial Constraints," IJFS, MDPI, vol. 9(1), pages 1-17, January.

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