Global decarbonization coordination and resource allocations in the private sector
Prof. Yupeng LIN
Dean’s Chair Associate Professor of Accountancy
National University of Singapore
Date: 25 August 2023 (Friday)
Time: 3:00 pm – 4:30 pm
Venue:E22 – G015
Host: Prof. Endong YANG, Assistant Professor in Finance
Online registration: https://umac.au1.qualtrics.com/jfe/form/SV_d0bLJV9xXILzry6
Abstract
This paper examines how international coordination efforts on decarbonization affect resource allocations in the private sector. Examining the U.S.’ sudden withdrawal from the 2015 Paris Agreement as a shock to these coordination efforts, we document a widespread reallocation of resources in the private sector that is likely detrimental to the environment. After the sudden withdrawal, U.S. polluting firms increase their emissions and receive bank financing at lower costs. In sharp contrast, climate-vulnerable U.S. firms face a significant increase in loan spreads after the withdrawal and are crowded out by the polluting firms’ growth, consistent with cross-subsidization. These detrimental effects are somewhat mitigated in U.S. states that participated in the bipartisan Climate Alliance coalition, but polluting firms strategically shift their operations away from these states to non-Alliance states. Reflecting the cross-border effects of the U.S. withdrawal, we observe similar patterns in emissions and loan financing of polluting firms in other countries that remain in the Paris Agreement treaty. The detrimental effects of this global coordination failure are more prominent in countries with weaker commitments to the treaty and whose cultures are more short-term oriented.
Speaker
Prof. Yupeng Lin is the Dean’s Chair Associate Professor of Accountancy at the National University of Singapore. Prof. Lin’s primary research interests focus on disclosure, auditing, and tax. His research has been published in major accounting and finance journals, including The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Research, Journal of Financial and Quantitative Analysis, Review of Corporate Finance Studies, Journal of Law and Economics and Organization Science.
All are welcome!
