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Mandatory climate risk disclosures: Do CEO legal qualifications matter?

Tracks
Crystal 2
Tuesday, July 2, 2024
11:25 AM - 11:50 AM

Presenter

Assoc Prof Muhammad Nadeem
Associate Professor
The University of Queensland

Mandatory climate risk disclosures: Do CEO legal qualifications matter?

Abstract

We examine whether and how the presence of CEOs with a law qualification (hereafter lawyer CEOs) affects corporate climate risk disclosures. Utilizing BERT, an AI-based algorithm for language understanding to capture corporate climate risk disclosures, we provide original evidence that companies led by lawyer CEOs disclose 14.18% more climate risk information, compared with non-lawyer CEOs companies. We also test the heterogeneity in climate risk disclosure and our findings indicate that lawyer CEOs prefer physical climate risk disclosures over transition risks. In our channel analysis, we find evidence that lawyer CEOs reduce environmental violations and promote environment-related innovation (eco-innovation), leading to higher climate risk disclosures. Additional tests reveal that the documented relationship between lawyer CEOs and climate risk disclosure is more obvious in firms with poor external monitoring, higher climate policy uncertainty, and those that operate in highly regulated industries. Our results remained robust after accounting for potential endogeneity concerns. We discuss vital policy implications of this study.

Biography


Chair

Charlene Chen
Senior Lecturer
Macquarie University


Discussant

Agenda Item Image
Helen Spiropoulos
Associate Professor
University of Technology Sydney

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