IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v62y2024ipas1544612324002046.html
   My bibliography  Save this article

Shaping sustainability: How corporate reputation can be enhanced under climate change conditions

Author

Listed:
  • Pan, Junyu
  • Hunjra, Ahmed Imran
  • Bruna, Maria Giuseppina
  • Zhao, Shikuan
  • Bouri, Elie

Abstract

This paper examines the impact of global warming on corporate reputation. Using data on Chinese listed firms from 2012 to 2022, corporate reputation scores and ratings are constructed, and panel regressions conducted. The findings demonstrate a significantly negative impact of global warming (as measured by the average urban temperature) on corporate reputation. Firm risk-taking counteracts the negative impact of rising temperatures on corporate reputation, highlighting its ability to circumvent reputational damage under climate change. Firms located in non-resource cities, operating in non-labour-intensive industries, and boasting top environmental, social, and governance (ESG) rankings are more sensitive to the negative impact.

Suggested Citation

  • Pan, Junyu & Hunjra, Ahmed Imran & Bruna, Maria Giuseppina & Zhao, Shikuan & Bouri, Elie, 2024. "Shaping sustainability: How corporate reputation can be enhanced under climate change conditions," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324002046
    DOI: 10.1016/j.frl.2024.105174
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324002046
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105174?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Berkman, Henk & Jona, Jonathan & Soderstrom, Naomi, 2019. "Firm value and government commitment to combating climate change," Pacific-Basin Finance Journal, Elsevier, vol. 53(C), pages 297-307.
    2. Bernstein, Asaf & Billings, Stephen B. & Gustafson, Matthew T. & Lewis, Ryan, 2022. "Partisan residential sorting on climate change risk," Journal of Financial Economics, Elsevier, vol. 146(3), pages 989-1015.
    3. Violina P. Rindova & Charles J. Fombrun, 1999. "Constructing competitive advantage: the role of firm–constituent interactions," Strategic Management Journal, Wiley Blackwell, vol. 20(8), pages 691-710, August.
    4. Zhao, Shikuan & Cao, Yuequn & Hunjra, Ahmed Imran & Tan, Yan, 2023. "How does environmentally induced R&D affect carbon productivity? A government support perspective," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 942-961.
    5. Cai, Xiangshang & Gao, Ning & Garrett, Ian & Xu, Yan, 2020. "Are CEOs judged on their companies' social reputation?," Journal of Corporate Finance, Elsevier, vol. 64(C).
    6. Rob Dellink & Elisa Lanzi & Jean Chateau, 2019. "The Sectoral and Regional Economic Consequences of Climate Change to 2060," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(2), pages 309-363, February.
    7. Steve Miller & Kenn Chua & Jay Coggins & Hamid Mohtadi, 2021. "Heat Waves, Climate Change, and Economic Output," Journal of the European Economic Association, European Economic Association, vol. 19(5), pages 2658-2694.
    8. Javadi, Siamak & Masum, Abdullah-Al, 2021. "The impact of climate change on the cost of bank loans," Journal of Corporate Finance, Elsevier, vol. 69(C).
    9. Chen, Tao & Goh, Jing Rong & Kamiya, Shinichi & Lou, Pingyi, 2019. "Marginal cost of risk-based capital and risk-taking," Journal of Banking & Finance, Elsevier, vol. 103(C), pages 130-145.
    10. Kamiya, Shinichi & Kang, Jun-Koo & Kim, Jungmin & Milidonis, Andreas & Stulz, René M., 2021. "Risk management, firm reputation, and the impact of successful cyberattacks on target firms," Journal of Financial Economics, Elsevier, vol. 139(3), pages 719-749.
    11. James R Brown & Gustav Martinsson & Christian Thomann, 2022. "Can Environmental Policy Encourage Technical Change? Emissions Taxes and R&D Investment in Polluting Firms," The Review of Financial Studies, Society for Financial Studies, vol. 35(10), pages 4518-4560.
    12. Vibhuti Dhingra & Harish Krishnan, 2021. "Managing Reputation Risk in Supply Chains: The Role of Risk Sharing Under Limited Liability," Management Science, INFORMS, vol. 67(8), pages 4845-4862, August.
    13. Pan, Junyu & Peng, Jie & Yang, Xiaodong & Xuan, Siyuan, 2023. "Does water rights trading promote resources utilisation efficiency and green growth? Evidence from China's resources trading policy," Resources Policy, Elsevier, vol. 86(PB).
    14. Focke, Florens & Maug, Ernst & Niessen-Ruenzi, Alexandra, 2017. "The impact of firm prestige on executive compensation," Journal of Financial Economics, Elsevier, vol. 123(2), pages 313-336.
    15. Hochachka, Gail, 2023. "Climate change and the transformative potential of value chains," Ecological Economics, Elsevier, vol. 206(C).
    16. Wang, Xinyu & Zhao, Jing, 2023. "The green reputation: Corporate culture and environmental reputation risk," Finance Research Letters, Elsevier, vol. 58(PA).
    17. Maximilian Auffhammer, 2018. "Quantifying Economic Damages from Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 33-52, Fall.
    18. Ben Hmiden, Oussama & Rjiba, Hatem & Saadi, Samir, 2022. "Competition through environmental CSR engagement and cost of equity capital," Finance Research Letters, Elsevier, vol. 47(PB).
    19. Du, Lizhao & Wei, Mianjin & Zhang, Shaoxin & Pan, Junyu, 2023. "Unveiling the policy intervention effects of natural resource regulation on firm-level pollution emissions: Evidence from China's restrained land supply," Resources Policy, Elsevier, vol. 86(PA).
    20. Hossain, Ashrafee T. & Masum, Abdullah-Al, 2022. "Does corporate social responsibility help mitigate firm-level climate change risk?," Finance Research Letters, Elsevier, vol. 47(PB).
    21. Tran, Quoc Trung, 2023. "Employment protection and corporate risk-taking," Finance Research Letters, Elsevier, vol. 51(C).
    22. Bruna, Maria Giuseppina & Lahouel, Béchir Ben, 2022. "CSR & financial performance: Facing methodological and modeling issues commentary paper to the eponymous FRL article collection," Finance Research Letters, Elsevier, vol. 44(C).
    23. Stewart R. Miller & Lorraine Eden & Dan Li, 2020. "CSR Reputation and Firm Performance: A Dynamic Approach," Journal of Business Ethics, Springer, vol. 163(3), pages 619-636, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hossain, Ashrafee & Rjiba, Hatem & Zhang, Dongyang, 2023. "Ex-ante litigation risk and firm-level climate-change exposure," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 731-746.
    2. Ongsakul, Viput & Papangkorn, Suwongrat & Jiraporn, Pornsit, 2023. "Estimating the effect of climate change exposure on firm value using climate policy uncertainty: A text-based approach," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).
    3. Mbanyele, William & Muchenje, Linda Tinofirei, 2022. "Climate change exposure, risk management and corporate social responsibility: Cross-country evidence," Journal of Multinational Financial Management, Elsevier, vol. 66(C).
    4. Tol, Richard S.J., 2024. "A meta-analysis of the total economic impact of climate change," Energy Policy, Elsevier, vol. 185(C).
    5. Lee, Chien-Chiang & Wang, Chih-Wei & Thinh, Bui Tien, 2023. "Green development, climate risks, and cash flow: International evidence," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    6. Desbordes, Rodolphe & Eberhardt, Markus, 2024. "Climate change and economic prosperity: Evidence from a flexible damage function," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    7. Uyar, Ali & Kuzey, Cemil & Karaman, Abdullah S., 2022. "ESG performance and CSR awards: Does consistency matter?," Finance Research Letters, Elsevier, vol. 50(C).
    8. Wang, Yujie & Tsang, Albert & Xiang, Yi & Yao, Daifei (Troy), 2023. "Corporate social responsibility misconduct and formation of board interlocks," Journal of Financial Stability, Elsevier, vol. 67(C).
    9. Agoraki, Konstantina K. & Giaka, Maria & Konstantios, Dimitrios & Negkakis, Ioannis, 2024. "The relationship between firm-level climate change exposure, financial integration, cost of capital and investment efficiency," Journal of International Money and Finance, Elsevier, vol. 141(C).
    10. Antonio Accetturo & Matteo Alpino, 2023. "Climate change and Italian agriculture: evidence from weather shocks," Questioni di Economia e Finanza (Occasional Papers) 756, Bank of Italy, Economic Research and International Relations Area.
    11. Gabriele Standardi, 2023. "Exploring market-driven adaptation to climate change in a general equilibrium global trade model," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(2), pages 1-29, February.
    12. Xuan, Siyuan & Ge, Wenfeng & Yang, Ping & Zhang, Yunfeng, 2024. "Exploring digital finance, financial regulations and carbon emission nexus: New insight from resources efficiency, industrial structure and green innovation in China," Resources Policy, Elsevier, vol. 88(C).
    13. David Berlepsch & Fred Lemke & Matthew Gorton, 2024. "The Importance of Corporate Reputation for Sustainable Supply Chains: A Systematic Literature Review, Bibliometric Mapping, and Research Agenda," Journal of Business Ethics, Springer, vol. 189(1), pages 9-34, January.
    14. Ahmed, Mohamed Shaker & Elnahass, Marwa, 2024. "Being famous matters: Evidence from cash flow volatility," International Review of Financial Analysis, Elsevier, vol. 93(C).
    15. Bryce, Cormac & Dowling, Michael & Lucey, Brian, 2020. "The journal quality perception gap," Research Policy, Elsevier, vol. 49(5).
    16. Ghafoor, Abdul & Šeho, Mirzet & Sifat, Imtiaz, 2023. "Co-opted board and firm climate change risk," Finance Research Letters, Elsevier, vol. 52(C).
    17. Patrycja Klusak & Matthew Agarwala & Matt Burke & Moritz Kraemer & Kamiar Mohaddes, 2023. "Rising Temperatures, Falling Ratings: The Effect of Climate Change on Sovereign Creditworthiness," Management Science, INFORMS, vol. 69(12), pages 7468-7491, December.
    18. Nelson, Tim & Pascoe, Owen & Calais, Prabpreet & Mitchell, Lily & McNeill, Judith, 2019. "Efficient integration of climate and energy policy in Australia’s National Electricity Market," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 178-193.
    19. Falk, Armin & Boneva, Teodora & Chopra, Felix, 2021. "Fighting Climate Change: the Role of Norms, Preferences, and Moral Values," CEPR Discussion Papers 16343, C.E.P.R. Discussion Papers.
    20. Kirsten Burkhardt & Pascal Nguyen & Evelyne Poincelot, 2020. "Agents of change: Women in top management and corporate environmental performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1591-1604, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324002046. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.