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Does internal carbon pricing improve firm performance? Evidence from indian listed companies

Author

Listed:
  • Veeravel, V
  • Hiremath, Rahul B.
  • Panda, Pradiptarathi

Abstract

This study evaluates the effect of internal carbon pricing (ICP) disclosure on the financial performance of publicly listed firms in India, an emerging economy. Firm performance is measured through return on assets (ROA), return on equity (ROE), return on capital employed (ROCE), and earnings per share (EPS). Employing Panel-Corrected Standard Errors (PCSE) and two-stage least squares (2SLS), the analysis reveals consistent positive associations for ROA, ROE, and EPS, with ROCE positive but insignificant. Findings underscore ICP disclosure as a strategic sustainability mechanism that strengthens corporate accountability, enhances firm value, and informs policy debates on climate-related financial disclosure in emerging markets.

Suggested Citation

  • Veeravel, V & Hiremath, Rahul B. & Panda, Pradiptarathi, 2025. "Does internal carbon pricing improve firm performance? Evidence from indian listed companies," Finance Research Letters, Elsevier, vol. 86(PE).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pe:s1544612325020343
    DOI: 10.1016/j.frl.2025.108780
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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