Investor concerns about climate and other environmental risks suggest that these risks, particularly those arising from expected changes in regulations, should affect the assessed risk and pricing of corporate bonds. We consider the influence that a firm's environmental profile, combined with the firm's regulatory conditions, has on its bond credit ratings and yield spreads. Using the Paris Agreement as a shock to expected climate regulation, we provide evidence of a causal relation between climate regulatory risks and the credit ratings and yield spreads of bonds from issuers with problematic environmental proles.
Speaker
Laura T. Starks, Ph.D., is the Charles E and Sarah M Seay Regents Chair in Finance and co-Executive Director of the Social Innovation Initiative at the McCombs School of Business, University of Texas at Austin. She teaches graduate and undergraduate courses on environmental, social and governance investing. Her current research focuses on ESG issues, including climate finance and board diversity, as well as molecular genetics and financial decisions. She has served as President of the Society of Financial Studies, Western Finance Association and Financial Management Association, and is presently President-Elect of of the American Finance Association. Read: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3563271
Centre for a Responsible Wealth Transition
This seminar is organized by the The Centre for a Responsible Wealth Transition (CRWT), which is a new research cluster at the Telfer School of Management that intends to promote cutting-edge and industry-relevant interdisciplinary research to provide new insights and innovative financial solutions fostering a transition towards a more resilient economy and responsible wealth management practices. The cluster includes the following four sub-clusters: “Responsible Investing”, “Climate Finance and Accountability”, “Emerging Technologies”, and “Risk Intelligence and Resilient Solutions”.
