Quotation Dai, Rui, Duan, Rui, Liang, Hao, Ng, Lilian. 2021. Outsourcing Climate Change. Asian Bureau of Finance and Economic Research Annual Conference, Virtual, Singapore, 24.05-27.05.


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Abstract

This paper exploits newly available information on firms' direct (own production) and indirect (supplier-generated) carbon emission intensities and transaction-level imports to conduct an in-depth holistic analysis of whether and how U.S. firms address climate change. We find robust evidence that U.S. firms' imports amplify the substitutional relationship between their direct and indirect carbon emissions, suggesting that these firms outsource part of their pollution to suppliers overseas. Our key evidence is further substantiated by quasi-natural experiments associated with exogenous shocks to U.S. firms' propensity to outsource carbon emissions. We also show that firms, management, and directors with desires to maintain high environmental standings and environmentally-conscious customers and investors play a role in corporate environmental policies. Finally, firms with more imported emissions tend to have higher reputational risks and larger future stock returns but are less incentivized to develop clean technologies.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title Outsourcing Climate Change
Event Asian Bureau of Finance and Economic Research Annual Conference
Year 2021
Date 24.05-27.05
Country Singapore
Location Virtual
JEL G23, G30, G34, M14

Associations

People
Duan, Rui (Details)
External
Dai, Rui (Wharton Research Data Services, United States/USA)
Liang, Hao (Singapore Management University, Singapore)
Ng, Lilian (York University, Canada)
Organization
Institute for Finance, Banking and Insurance IN (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
5358 Corporate finances (Details)
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