Climate change risk and corporate bankruptcy risk: The impact of carbon emissions CO2 in Vietnam

Climate change risk is emerging as a significant risk for economies and businesses today. Climate change risk affects businesses through two main transmission channels: physical risk and transition risk. Transition risk is causing certain impacts on businesses as low carbon (CO2) emission policies are being implemented. The goal of green growth and transitioning the economy to low carbon (CO2) emissions is posing challenges for businesses. Therefore, understanding the direct and indirect impacts of climate change risks on businesses will be of great interest to policymakers, capital providers, and different levels of corporate management. In this study, the author provides an in-depth perspective on the impact of climate change risk and the bankruptcy risk of businesses. By measuring climate change risk through corporate carbon (CO2) emissions, the author finds that companies with higher CO2 emissions are at greater risk of bankruptcy. The research sample includes listed companies in Vietnam during the 2012 2022 period, comprising a total of 2191 companies and 15,873 year-observations, and utilizes logistic regression with panel data.