Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy Industry
We explore the impact on firm value by numerous factors in the energy industry using panel data from 2010 to 2020. The analysis employs different econometric methods, including fixed-effects, random-effects, two-stage least squares, and generalized method of moments. Our main variables of interest a...
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| Format: | Article |
| Language: | English |
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Academic Research and Publishing UG
2023-06-01
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| Series: | Financial Markets, Institutions and Risks |
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| Online Access: | https://armgpublishing.com/wp-content/uploads/2023/07/FMIR_2_2023_1.pdf |
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| _version_ | 1849732045933117440 |
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| author | Mirza Muhammad Naseer Tanveer Bagh Kainat Iftikhar |
| author_facet | Mirza Muhammad Naseer Tanveer Bagh Kainat Iftikhar |
| author_sort | Mirza Muhammad Naseer |
| collection | DOAJ |
| description | We explore the impact on firm value by numerous factors in the energy industry using panel data from 2010 to 2020. The analysis employs different econometric methods, including fixed-effects, random-effects, two-stage least squares, and generalized method of moments. Our main variables of interest are firm value, firm-level climate change risk, fixed assets, leverage, dividend yield, market capitalization, and assets tangibility. The result suggests that investors are valuing energy firms less due to their exposure to climate change risk. We found that climate change risk, fixed assets, firm leverage, and assets tangibility are negatively related while market capitalization and dividend yield are positively related to firm value. These findings have important implications for energy firms, policymakers, and investors. Energy firms need to consider climate change risk in their investment decisions to maintain their market value, and policymakers should encourage firms to disclose their climate change risk to improve market efficiency. Finally, investors need to incorporate climate change risk in their investment strategies to mitigate potential financial losses. |
| format | Article |
| id | doaj-art-e62c1799106b4385b9493886dea23a71 |
| institution | DOAJ |
| issn | 2521-1250 2521-1242 |
| language | English |
| publishDate | 2023-06-01 |
| publisher | Academic Research and Publishing UG |
| record_format | Article |
| series | Financial Markets, Institutions and Risks |
| spelling | doaj-art-e62c1799106b4385b9493886dea23a712025-08-20T03:08:21ZengAcademic Research and Publishing UGFinancial Markets, Institutions and Risks2521-12502521-12422023-06-017211110.61093/fmir.7(2).1-11.2023Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy IndustryMirza Muhammad Naseer0https://orcid.org/0000-0002-5740-1927Tanveer Bagh1https://orcid.org/0000-0001-9488-7885Kainat Iftikhar2https://orcid.org/0000-0002-9896-5868International Business School, Teesside University, Middlesbrough, United KingdomSchool of Finance, Central University of Finance and Economics, ChinaSchool of Finance, Central University of Finance and Economics, ChinaWe explore the impact on firm value by numerous factors in the energy industry using panel data from 2010 to 2020. The analysis employs different econometric methods, including fixed-effects, random-effects, two-stage least squares, and generalized method of moments. Our main variables of interest are firm value, firm-level climate change risk, fixed assets, leverage, dividend yield, market capitalization, and assets tangibility. The result suggests that investors are valuing energy firms less due to their exposure to climate change risk. We found that climate change risk, fixed assets, firm leverage, and assets tangibility are negatively related while market capitalization and dividend yield are positively related to firm value. These findings have important implications for energy firms, policymakers, and investors. Energy firms need to consider climate change risk in their investment decisions to maintain their market value, and policymakers should encourage firms to disclose their climate change risk to improve market efficiency. Finally, investors need to incorporate climate change risk in their investment strategies to mitigate potential financial losses.https://armgpublishing.com/wp-content/uploads/2023/07/FMIR_2_2023_1.pdfclimate change riskfirm valueenergy industryfirm-level climate exposuredividend yield |
| spellingShingle | Mirza Muhammad Naseer Tanveer Bagh Kainat Iftikhar Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy Industry Financial Markets, Institutions and Risks climate change risk firm value energy industry firm-level climate exposure dividend yield |
| title | Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy Industry |
| title_full | Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy Industry |
| title_fullStr | Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy Industry |
| title_full_unstemmed | Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy Industry |
| title_short | Firm’s Climate Change Risk and Firm Value: An Empirical Analysis of the Energy Industry |
| title_sort | firm s climate change risk and firm value an empirical analysis of the energy industry |
| topic | climate change risk firm value energy industry firm-level climate exposure dividend yield |
| url | https://armgpublishing.com/wp-content/uploads/2023/07/FMIR_2_2023_1.pdf |
| work_keys_str_mv | AT mirzamuhammadnaseer firmsclimatechangeriskandfirmvalueanempiricalanalysisoftheenergyindustry AT tanveerbagh firmsclimatechangeriskandfirmvalueanempiricalanalysisoftheenergyindustry AT kainatiftikhar firmsclimatechangeriskandfirmvalueanempiricalanalysisoftheenergyindustry |