Carbon assurance: Does it have an impact on credit ratings?

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Date
2025-02-08
Open Access Location
Journal Title
Journal ISSN
Volume Title
Publisher
John Wiley and Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand
Rights
(c) The author/s
CC BY
Abstract
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.
Description
Keywords
assurance level, assurance percentage, carbon assurance, credit ratings, climate change, climate action (SDG13)
Citation
Safiullah M, Nguyen LTM, Houqe MN, Batten J. (2025). Carbon assurance: Does it have an impact on credit ratings?. Accounting and Finance. Early View.
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