Search
Net-zero policy and forward default risk in the energy sector:Evidence of corporate environmentalism using (a)symmetricmodels
Abstract
This study aims to examine the impact of the net-zero policy on forward default risk atthe firm level within the energy sector of the US, spanning over the period 2007–2021.The research employs Panel Vector Autoregression (PVAR) modeling, as well as linearand non-linear Autoregressive Distributed Lag (ARDL) models to investigate this rela-tionship. The findings suggest that the implementation of net-zero policy measures canhave complex effects on firms' default risk in both the short and long run. The PVARresults confirm a unidirectional negative impact of net-zero policies on forward defaultrisk over 2, 3, and 5 years. The symmetric ARDL model results show a negative long-runimpact on the future probability of default, with short-run impacts being positive acrossall time horizons. The asymmetric ARDL model findings indicate that positive net-zeromeasures reduce the probability of default in the long run and increase it in the shortrun across all time horizons. Conversely, negative shocks of net-zero measures lead toan increase in the forward probability of default in the long run. The differences in find-ings between the long and short run are attributed to the effects of capital expenditureson infrastructure expenses required to achieve net-zero results. This study contributesto the literature on financial outcomes and the impact of adopting sustainable develop-ment and net-zero goals. The policy implications suggest that a supportive institutionalframework must be provided to reduce the financial default in energy sector firms,which will assist in capital and infrastructure expenditures in the short run.
Citations
-
0
CrossRef
-
0
Web of Science
-
0
Scopus
Authors (3)
-
Nicholas Apergis Prof.
Cite as
Full text
full text is not available in portal
Keywords
Details
- Category:
- Articles
- Type:
- artykuły w czasopismach
- Published in:
-
Business Strategy and the Environment
no. 34,
pages 1475 - 1493,
ISSN: 0964-4733 - Language:
- English
- Publication year:
- 2025
- Bibliographic description:
- Mushafiq M., Prusak B., Apergis N.: Net-zero policy and forward default risk in the energy sector:Evidence of corporate environmentalism using (a)symmetricmodels// Business Strategy and the Environment -,iss. Volume 34, Issue 1 (2025), s.1475-1493
- DOI:
- Digital Object Identifier (open in new tab) 10.1002/bse.4058
- Sources of funding:
-
- Free publication
- Verified by:
- Gdańsk University of Technology
seen 8 times
Recommended for you
Merton-type default risk and financial performance: the dynamic panel moderation of firm size
- M. Mushafiq,
- S. A. Sami,
- M. K. Sohail
- + 1 authors