Environmental Transaction Costs and Speed of Adjustment to Target Debt in European Carbon Emitters

Journal of Cleaner Production, Volume 256, 2020, 120483, DOI/10.1016/j.jclepro.2020.120483.

Posted: 16 Mar 2020

See all articles by Paula Castro

Paula Castro

Universidad de León

Maria T. Tascón

Universidad de León

Carmen Fernández-Cuesta

Independent

Francisco J. Castaño

Universidad de León

Date Written: February 20, 2020

Abstract

This study analyzes how environmental transaction costs affect the speed of adjustment to the target financial debt. By applying GMM and panel data on European listed firms over the period 2005–2015, we find that the speed of adjustment is slower for carbon emitters. These results suggest that higher transaction costs (TCs) are associated with carbon emissions. However, the effect can be avoided in some cases, such as when larger firms benefit from economies of scale for a large portion of their TCs and when high-tech firms can optimally integrate TCs into their organization. By contrast, regulated firms suffer stronger negative effects of environmental TCs on their financial performance.

Keywords: Environmental transaction costs, Financial debt, Speed of adjustment, European public firms

Suggested Citation

Castro, Paula and Tascon, Maria Teresa and Fernández-Cuesta, Carmen and Castaño, Francisco Javier, Environmental Transaction Costs and Speed of Adjustment to Target Debt in European Carbon Emitters (February 20, 2020). Journal of Cleaner Production, Volume 256, 2020, 120483, DOI/10.1016/j.jclepro.2020.120483., Available at SSRN: https://ssrn.com/abstract=3541694

Paula Castro (Contact Author)

Universidad de León ( email )

Leon, 24071
Spain

Maria Teresa Tascon

Universidad de León ( email )

Leon, 24071
Spain

Francisco Javier Castaño

Universidad de León ( email )

Spain

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