Carbon Emission Strategies and Enterprise Value: The Mediating Role of Return on Assets with Income Diversification Disclosure and Board Size as Control Variables
Keywords:
Carbon Emission Strategy, Tobin’s Q, ROA, Oil and Gas Companies, SEM-PLS.Abstract
This study examines the impact of carbon emission policies on the market value of international oil and gas firms, utilizing Return on Assets (ROA) as a mediating variable. The sample comprises 97 publicly traded firms in 2023, with data sourced from annual reports, ESG reports, and market data. Strategies for carbon emissions, disclosures on revenue diversification, board size, return on assets (ROA), and Tobin's Q are evaluated using a PLS-SEM model, yielding a R² of 0.577 for Tobin's Q. Their robustness is evaluated by OLS regression incorporating nation fixed effects and clustering errors. The findings indicate that carbon emission methods exert a positive and significant influence on ROA and Tobin's Q (total effect on Tobin's Q = 0.146; p < 0.05), hence allowing the market to value more proactive decarbonization initiatives while concurrently enhancing operational performance. Conversely, ROA exerts a negative and significant influence on Tobin’s Q (coefficient = –0.142; p < 0.05), establishing a partial mediation that diminishes the direct impact of carbon policy on market value. The disclosure of revenue diversification (≈ 0.663; p < 0.01) and board size positively influence Tobin’s Q. These findings validate the significance of climate reporting and offer implications for boards, investors, and regulators.
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