Corporate Integrity Culture and Climate Change Exposure

Seminar summary

This study provides the first empirical evidence of the relationship between corporate integrity culture and firm-level climate change exposure. Using insights from social norm theory and a sample of 31,187 firm-year observations from US public firms during the period 2001 to 2021, we conclude that corporate integrity culture is negatively associated with climate change exposure. Our evidence further indicates that this association is more pronounced for firms that experience high policy uncertainty and greater financially distress. Our main findings are robust to different endogeneity identifications, including firm-fixed effects, propensity score matching, additional control variables, and instrumental variable approach. Our channel analysis further suggests that a strong integrity culture mitigates corporate climate change exposure through a stronger internal control environment and higher environmental, social and governance (ESG) disclosures and engagements. Our additional analysis indicates that the sudden death of the chief executive officer results in a weakening corporate integrity culture, which eventually increases climate change exposure. Overall, we present novel evidence of how corporate integrity culture mitigates climate change risk and offer important implications for managers and policymakers.

How to attend this seminar

This seminar is free to attend with no need to register in advance.

We welcome you to join us online on Wednesday 15 May 2024 at 2pm.

Speaker bio

Dr Faizul Haque

Dr Faizul Haque is an Associate Professor and Head of Research in the Department of Accounting at Southampton Business school, University of Southampton. He is also the Director of the Centre for Research in Accounting, Accountability and Governance (CRAAG).

Faizul has been featured in the prestigious Stanford University Ranking of top 2% global scientists in 2023. His research interests include, Carbon and biodiversity accounting, ESG disclosure and performance, corporate governance and business ethics, audit quality and auditor behaviour, earnings quality and management and implications of emerging technologies in accounting and sustainability. Faizul has presented his research at several international conferences in the UK, Italy and France, and published papers in top ranked international journals such as British Journal of Management (ABS 4), British Accounting Review (ABS 3*), Critical Perspectives on Accounting (ABS 3*), Business Strategy and the Environment (ABS 3*), International Review of Economics & Finance (ABDC A-ranked), Applied Economics (ABDC A-ranked).

Faizul’s research is cited widely by policymakers and practitioners. (e.g., European Commission, European Central Bank, and Bank for International Settlements). He has been collaborating with colleagues to engage in consultation with the policymakers and standard setting bodies such as the UK Department for Business, Energy and Industrial Strategy (BEIS), International Sustainability Standards Board (ISSB) and International Auditing and Assurance Standards Board (IAASB). Consequently, he submitted expert comments and scientific evidence on several proposed regulatory guidance and standards. These include, (i) ‘Mandatory climate-related financial disclosures by publicly quoted companies, large private companies and Limited Liability Partnerships (LLPs)’ to BEIS; (ii) ‘IFRS Sustainability Disclosure Taxonomy on IFRS S1 and S2’ to ISSB, and (iii) International Standard on Sustainability Assurance Engagements (ISSA) 5000 General Requirements’ to IAASB.