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Kim, Daniel and Pouget, Sébastien
ORCID: https://orcid.org/0000-0002-8764-2043
(2026)
Do carbon emissions affect the cost of capital?
Journal of Corporate Finance, vol. 97 (n° 102932).
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Abstract
We empirically study whether carbon emissions affect firms’ cost of capital raised on conventional bond markets. We find that firms with higher carbon emissions face higher spreads in the secondary market but not in the primary market. We show that this gap is related to uncertainty about climate concerns that affects differently primary and secondary market. This gap is also affected by the reputation of underwriting dealers: high reputation promotes the incorporation of climate concerns into bond yields. Our findings imply that, on average, carbon emissions do not affect the cost of capital in bond markets, thereby reducing firms’ financial incentives for decarbonization.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | February 2026 |
| Refereed: | Yes |
| Uncontrolled Keywords: | Climate finance, Carbon premium, Bond markets, Green investors, Underwriting dealers |
| JEL Classification: | G12 - Asset Pricing; Trading volume; Bond Interest Rates |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 22 Jan 2026 07:44 |
| Last Modified: | 22 Jan 2026 07:45 |
| OAI Identifier: | oai:tse-fr.eu:131136 |
| URI: | https://publications.ut-capitole.fr/id/eprint/51681 |
Available Versions of this Item
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Do carbon emissions affect the cost of capital? Primary versus secondary corporate bond markets. (deposited 25 Sep 2023 07:53)
- Do carbon emissions affect the cost of capital? (deposited 22 Jan 2026 07:44) [Currently Displayed]
