Skovoroda, Rodion, Liu, Siqi, Liu, Xianmin, Ahmad, Sardar and Stark, Andrew W. (2025) Firm-specific climate change risk and environmental contracting. In: 48th European Accounting Association (EAA) Annual Congress, 27th - 29th May, 2026, Prague University of Economics and Business, Czech Republic.

PDF (Conference Paper) 52580 LIU_Firm-Specific_Climate_Change_Risk_And_Environmental_Contracting_(CONFERENCE PAPER AAM)_2026.pdf - Accepted Version Restricted to Repository staff only Download (1MB) | Request a copy

Abstract

This paper investigates how firm-level climate risk exposure influences the adoption of environmental contracting in CEO compensation (E-contracting). We find that regulatory climate risk consistently emerges as the strongest predictor of E-contracting, particularly in states with weaker climate policies. Technological opportunities show no robust effect, while physical risk exhibits context-dependent patterns—negative in disaster-prone or policy-weak states but positive elsewhere. We also find that firms with prior social contracting (S-contracting) are significantly more likely to adopt E-contracting, indicating complementarity between the two forms of non-financial performance measures. Overall, the evidence suggests that E-contracting functions primarily as a regulatory-compliance response rather than a market-driven adaptation. The study contributes by identifying the specific climate-risk channel—regulatory risk—that most strongly shapes environmental incentive design in executive pay.

Item Type:	Conference or Conference Paper (Paper)
Uncontrolled Keywords:	climate change risk, climate risk exposure, regulatory risk, environmental contracting (E-contracting), CEO compensation, executive compensation
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
Faculty / School / Research Centre / Research Group:	Greenwich Business School Greenwich Business School > School of Accounting, Finance and Economics
Last Modified:	03 Mar 2026 16:10
URI:	https://gala.gre.ac.uk/id/eprint/52580

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