The moderating role of culture in the relationship between carbon emissions and firm value.
This research examines the moderating effect of culture on the relationship between carbon emissions and firm value, using carbon emissions data, firm data, and cultural data from 2011-2018. Based on a sample of 1,101 firms from 41 countries, additional support is provided for the previously researched negative relationship between carbon emissions and firm value. This finding is consistent with the argument that capital markets impose a penalty for firms’ carbon emissions. Only three of the six cultural dimensions have significant moderating effects when firm value is measured as the market value of common equity. However, all cultural dimensions except the masculinity-femininity dimension have significant moderating effects with ROA as measure of firm value. Additionally, with Tobin’s Q, only the long-term orientation dimension has a significant moderating effect. Thus, with market value and Tobin’s Q, the negative relationship between carbon emissions and firm value is quite robust against cultural differences. Nevertheless, this research is the first to find significant evidence for moderating effects of the power distance index, individualistic-collectivistic dimension, masculinity-femininity dimension, and the indulgence-restraint dimension on the relationship between carbon emissions and firm value. However, further research is needed to examine these moderating effects in other settings.
Faculteit der Managementwetenschappen