| Title | The pricing of low emission transitions: Evidence from stock returns of natural resource firms in the GCC |
|---|---|
| ID_Doc | 67456 |
| Authors | Pan, CC; Sun, TZ; Mirza, N; Huang, YZ |
| Title | The pricing of low emission transitions: Evidence from stock returns of natural resource firms in the GCC |
| Year | 2022 |
| Published | |
| Abstract | Promoting a green financial sector is imperative to achieve the goals of circular economies. The role of green finance is not only limited to providing robust financing for the transition but is also relevant to sustaining environmentally friendly business models. This research aims to evaluate whether investors demand a risk premium for transitions to low emission firms in countries where high emitters from natural resources-related firms exhibit significant market power. We use a time series sample of firms from six GCC countries between 2011 and 2020 and introduce an emission-based risk factor in the conventional asset pricing framework. Our findings suggest that carbon emissions are systematically priced in the stock returns. Therefore, we argue that the investors will require additional compensation to include low emitters in their portfolios to substitute for more polluting but dominant firms resulting in a higher cost of capital for green firms. We suggest that fiscal in-terventions in the short to medium term can help in incentivizing the investors to adopt sustainable investment styles. |
Similar Articles
| ID | Score | Article |
|---|---|---|
63829
|
Alessi, L; Ossola, E; Panzica, R When do investors go green? Evidence from a time-varying asset-pricing model*(2023) | |
| 67990
|
Lichtenberger, A; Braga, JP; Semmler, W Green Bonds for the Transition to a Low-Carbon Economy(2022)Econometrics, 10, 1 | |
| 76878
|
Ma, JL; Kuo, J Environmental self-regulation for sustainable development: Can internal carbon pricing enhance financial performance?(2021)Business Strategy And The Environment, 30, 8 | |
| 21727
|
Jiang, C; Qiu, YH Dynamic relationship between green finance, environmental taxes, and CO2 emissions in transition toward circular economy: what causes what?(2023)Environmental Science And Pollution Research, 30.0, 45 | |
| 67196
|
Zhao, D; e-Ali, MS; Chaudhry, MO; Ayub, B; Waqas, M; Ullah, I Modeling the Nexus between geopolitical risk, oil price volatility and renewable energy investment; evidence from Chinese listed firms(2024) |