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Firm carbon risk exposure, stock returns, and dividend payment

Author

Listed:
  • Sabri Boubaker

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School)

  • Tonmoy Choudhury

    (SP Jain School of Global Management [Sydney])

  • Fakhrul Hasan

    (Newcastle University Business School, Northumbria University [Newcastle])

  • Duc Khuong Nguyen

    (DVHE - De Vinci Higher Education)

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.

Suggested Citation

  • Sabri Boubaker & Tonmoy Choudhury & Fakhrul Hasan & Duc Khuong Nguyen, 2024. "Firm carbon risk exposure, stock returns, and dividend payment," Post-Print hal-04648626, HAL.
    • Handle: RePEc:hal:journl:hal-04648626
    DOI: 10.1016/j.jebo.2023.12.029
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    Cited by:

    1. Duppati, Geeta, 2025. "Carbon pricing and revenue growth valuation risk exposure," International Review of Economics & Finance, Elsevier, vol. 103(C).
    2. A. Akshaya & B. V. Gopalakrishna, 2025. "Impact of climate and economic policy uncertainties on inflation in India: using the vector error correction model approach," Asia-Pacific Journal of Regional Science, Springer, vol. 9(2), pages 585-604, June.
    3. Carlo Drago & Massimo Arnone & Angelo Leogrande, 2025. "Exploring N₂O Emissions at World Level: Advanced Econometric and Machine Learning Approaches in the ESG Context," Working Papers hal-04994903, HAL.
    4. Benkraiem, Ramzi & Berrich, Olfa & Lakhal, Nadia & Nizar, Hamza & Lakhal, Faten, 2025. "Balancing ecology and finance: The impact of carbon performance on dividend payout policy," Research in International Business and Finance, Elsevier, vol. 74(C).
    5. Carlo Drago & Massimo Arnone & Angelo Leogrande, 2025. "A Machine Learning and Panel Data Analysis of N 2 O Emissions in an ESG Framework," Sustainability, MDPI, vol. 17(10), pages 1-56, May.
    6. Zhou, Yang & Lucey, Brian M. & He, Feng, 2025. "Dividend payouts and biodiversity risk — Chinese evidence," Research in International Business and Finance, Elsevier, vol. 76(C).

    More about this item

    Keywords

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    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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