Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 21, 2023 erstellt
Beschreibung:
We examine how transition risk related to climate change affects the debt financing costs of carbon emitting firms. We derive a model of climate risk where firms operate with a dirty emissions-generating process that is exposed to technological change in the form of a competing clean-air technology. The model predicts a declining term structure of discount rates for firms subject to transition risk, implying that transition risk has a greater impact on short-term debt relative to long-term debt. We empirically verify these predictions by comparing yield-spreads and bond-portfolio returns on short- and long-term bonds issued by carbon emission intensive firms