Abstract
This study advances the role of the characteristics of the signal environments, in particular carbon concerns and signaling costs, to explain variation in the carbon premium. Empirical evidence indicates that proactive carbon information disclosure acts as a positive market signal and can enhance stock returns, with disclosure quality further augmenting the carbon premium. While investor confidence serves as a mediating factor, the influence of debt financing costs remains constrained. Signal environments will moderate the carbon premium: in regions and industries with high carbon concerns, the carbon premium is strengthened significantly. Concurrently, smaller firms and those engaging in voluntary disclosure, characterized by elevated signaling costs, also have a higher carbon premium. Our research unravels the dynamics of the carbon premium through the lens of carbon information disclosure, offering invaluable insights for investor decision-making and managerial corporate governance.
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