Firms’ efforts to mitigate greenhouse gas emissions and curb climate change has recently become a significant area of concern to investors. We examine how management’s focus on mitigating its direct versus indirect emissions influences a firm’s ability to attract capital from investors, and how this ability is moderated by the firm’s corporate social responsibility (CSR) performance and adoption of an external emissions target. Using an experiment, we predict and find that investors perceive a firm with a relatively poor CSR performance record as more socially responsible, and therefore as a more attractive investment, when the firm focuses on mitigating direct versus indirect emissions. However, investors seem less concerned about the type of emissions firms mitigate when the firm has a relatively good CSR performance record. We also find that, regardless of CSR performance, adopting an external emissions target diminishes investment attractiveness when the firm focuses on mitigating indirect emissions, but not when the firm focuses on mitigating direct emissions. We discuss implications for theory and practice.
|Number of pages||44|
|Publication status||Published - Mar 2020|
|Series||Kelley School of Business Research Paper|