Does listing farther influence carbon emissions production? Evidence from internationally cross-border listed firms

Abstract

The past decade has witnessed an increase in stakeholder pressures for publicly-listed firms to reduce their emissions. While most firms have been receptive to these pressures, they have also been observed to devise strategies to circumvent regulatory guidelines and avoid liabilities. Drawing on a sustainable finance dataset on cross-border listed firms, this article examines how geographical distance in cross-border listings may exacerbate the amount of Scope 1, Scope 2, and Scope 3 emissions that firms produce to varying degrees. The findings across different model specifications reveal that distance is associated with increases in emissions among cross-listed firms, but the effect of distance is stronger for ln Scope 1 and ln Scope 2 Emissions among non-primary listings, whereas the effect is stronger for ln Scope 3 Emissions among primary listings. This article offers evidence that geographical distance in cross-border listings is a form of jurisdictional arbitrage used by firms to circumvent emissions regulations. Consistent with the way that firms offshore profits and operations to avoid tax liabilities, firms are theorized to offshore emissions and avoid emissions liabilities by listing in cross-border jurisdictions that are geographically distant from their home jurisdictions.