(John Wiley and Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand, 2025-02-08) Safiullah M; Nguyen LTM; Houqe MN; Batten J
This paper examines the impact of firm-level carbon assurance on credit ratings among U.S. publicly traded firms. The findings reveal a positive relationship, indicating that carbon assurance enhances credit ratings by reducing information asymmetry and attracting analyst following. These results are robust to alternative measures of variables, model specifications, and endogeneity tests. U.S. firms with higher carbon assurance benefit from improved creditworthiness, particularly in competitive markets and Democratic-leaning states. These findings support signalling theory and show the strategic importance of carbon assurance in credit assessments and corporate sustainability.
