- Title
- Corporate carbon management systems and financial outcomes
- Creator
- Shrestha, Pramila
- Relation
- University of Newcastle Research Higher Degree Thesis
- Resource Type
- thesis
- Date
- 2021
- Description
- Research Doctorate - Doctor of Philosophy (PhD)
- Description
- Using international firm-level data from 2010 to 2017 obtained from the CDP (formerly the Carbon Disclosure Project), I examine the effects of carbon management systems (CMSs) on firm financial outcomes by conducting three studies. Financial outcome measures include financial performance, operational efficiency, and market value performance. Study 1 examines whether higher-quality CMS improves corporate financial performance. I find that CMS quality is positively associated with financial performance, measured by return on assets (ROA). This result holds when I adopt alternative measures and model specifications, and control for non-response bias. A better-quality CMS is especially associated with higher revenues, margins, and research and development expenditure. Individual components of the CMS exert heterogeneous influences on financial performance. Carbon disclosure and communication, and carbon auditing, are positively associated with alternative proxies of financial performance, whereas external policy engagement is negatively associated. Board function, risk and opportunity assessment, staff involvement, emission reduction targets, carbon policy implementation, supply chain emission control and carbon accounting are unrelated to two of the financial performance measures: return on assets (ROA) and earnings before interest and tax divided by total assets (EBIT/TA). The positive association between CMS quality and financial performance is stronger for firms operating in carbon-intensive sectors and firms with higher carbon emissions. The conditional effect of carbon regulation such as a national emission trading schemes (ETS) is positive for carbon-intensive sectors but negative for non-carbon-intensive sectors. Study 2 adopts operational efficiency, derived from frontier analysis, to measure financial outcomes and examine the association with a CMS. The findings reveal that CMS quality is positively and significantly associated with operational efficiency. This result is robust when I exclude United States firms and countries with less than 10 observations, adopt weighted regression, control carbon intensity, and use alternative measures of CMS quality and the Heckman two-stage model. The positive association between CMS quality and operational efficiency only exists in large firms, firms operating in highly competitive environments and firms in civil law countries. A positive relationship is present in both ETS and non-ETS countries. Study 3 investigates the moderating effect of CMS quality on the firm value relevance of carbon emissions. The findings suggest that higher carbon emissions are negatively associated with firm value, but a better-quality CMS weakens this negative relationship. This result is robust when I exclude the financial sector, countries with less than 10 observations, negative book value and apply the Heckman two-stage model. The CMS positive moderating effect only exists in carbon-intensive, large, mature and highly profitable firms. This study enriches the debate over the costs and benefits of CMS by demonstrating the positive effect of CMS quality on financial outcomes, providing useful information to stakeholders concerned about carbon emission risks and financial outcomes of firms’ CMS.
- Subject
- carbon management system; financial outcomes; carbon disclosure; operational efficiency
- Identifier
- http://hdl.handle.net/1959.13/1429074
- Identifier
- uon:38680
- Rights
- Copyright 2021 Pramila Shrestha
- Language
- eng
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | ATTACHMENT01 | Thesis | 1 MB | Adobe Acrobat PDF | View Details Download | ||
| View Details Download | ATTACHMENT02 | Abstract | 260 KB | Adobe Acrobat PDF | View Details Download |