Impact of Corporate Climate Change Performance on Information Asymmetry: International Evidence

ABSTRACT In this study, we examine the association between climate change performance and information asymmetry using 6,367 firm-year observations from 2011 to 2020 across 26 countries. We find that climate change performance is negatively associated with information asymmetry, suggesting that firms with higher climate change performance tend to have lower information asymmetry. We also find that the negative association between climate change performance and information asymmetry is stronger for firms with a higher level of institutional ownership and better corporate governance. Further analyses show a more pronounced negative association between climate change performance and information asymmetry for firms domiciled in countries with stakeholder-oriented business culture, a national emissions trading scheme, and a higher level of climate change performance. Our study’s findings have significant implications for capital market participants, managers, policymakers, researchers, and practitioners worldwide in understanding the role of corporate climate change performance in the capital market. Data Availability: All data used in this paper are publicly available from the sources stated in the paper. JEL Classifications: G14; M14; M41; Q51; Q54.