A1620
Title: Environmental performance and credit ratings: A transatlantic study
Authors: Emese Lazar - University of Reading (United Kingdom) [presenting]
Shixuan Wang - University of Reading (United Kingdom)
Jingqi Pan - University of Reading (United Kingdom)
Abstract: The aim is to investigate whether an improvement in corporate environmental performance has a positive impact on the firms' credit ratings. In particular, a transatlantic study is conducted covering companies in the United States (US) and the European Union (EU) to explore any differences in the nature of this relationship between the two regions. The study reveals that corporate environmental performance positively contributes to the firms' credit ratings. However, this effect varies between the US and the EU. Firms in the US benefit more than those in the EU in terms of credit rating upgrades when they enhance their environmental performance by the same level. Additionally, it is shown that the relationship is linear in the US but nonlinear in the EU. These findings shed light on the implications of environmental performance and provide critical insights for firms seeking to improve their credit rating via sustainability initiatives, keeping in mind regional differences.
