Is it just for shareholders or for all stakeholders? Evidence based on carbon emissions and cash dividends from China

Abstract

AbstractAs people become more aware of the catastrophic risk of carbon emissions, investors demand compensation for their exposure to carbon emission risk. However, it is unclear how a firm's carbon emissions affect its dividend policy to cater to shareholders and its implications for other stakeholders. Using publicly listed A‐share companies in China, we find that carbon emissions positively affect firms' cash dividends. The positive effect is more pronounced for firms with higher growth, better performance and those in heavily polluting industries. Furthermore, the cash dividends induced by carbon emissions benefit all stakeholders by reducing agency costs and promoting green innovations.