The Effect of Carbon Dissemination on Cost of Equity

Business Strategy and the Environment, 2019

Posted: 6 May 2019

See all articles by Mohammed Albarrak

Mohammed Albarrak

University of Newcastle - Newcastle University Business School

Marwa Elnahass

Newcastle University Business School

Aly Salama

University of Newcastle - Newcastle University Business School

Date Written: February 26, 2019

Abstract

This study examines whether firms can influence their cost of equity (COE) by broadly disseminating their carbon information over Twitter. We study firms’ dissemination decisions of carbon information by developing a comprehensive measure of carbon information that a firm makes on Twitter, referred to as iCarbon. Using a sample of 1,737 firm-year observations for 584 non-financial firms with a Twitter account and listed on the US NASDAQ stock exchange over the period 2009-2015, we find that iCarbon is significantly and negatively associated with COE. Our results are consistent after determining the effect of Bloomberg's environmental (ENV) and environmental-social-governance (ESG) disclosure. The findings also hold when using alternative measures of COE and iCarbon.

Keywords: Dissemination; Carbon emissions; Climate change; Cost of equity; Legitimacy theory; Twitter

JEL Classification: G01, G32, G34, L20, M41

Suggested Citation

Albarrak, Mohammed and Elnahass, Marwa and Salama, Aly, The Effect of Carbon Dissemination on Cost of Equity (February 26, 2019). Business Strategy and the Environment, 2019. Available at SSRN: https://ssrn.com/abstract=3371221

Mohammed Albarrak

University of Newcastle - Newcastle University Business School ( email )

5 Barrack Road
Devonshire Building
NEWCASTLE UPON TYNE, NE1 7RU
United Kingdom

Marwa Elnahass (Contact Author)

Newcastle University Business School ( email )

5 Barrack Road
Newcastle University Business School
Newcastle Upon Tyne, NE1 4SE
United Kingdom

Aly Salama

University of Newcastle - Newcastle University Business School ( email )

5 Barrack Road
Devonshire Building
NEWCASTLE UPON TYNE, NE1 7RU
United Kingdom

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