Related Experiment Video
Updated: Sep 9, 2025

Design and Use of a Full Flow Sampling System FFS for the Quantification of Methane Emissions
Published on: June 12, 2016
Carbon markets and firms' perceived climate regulatory risk
Gbenga Adamolekun1, Hao Li2, Bing Xu3
1The Business School, Edinburgh Napier University, Edinburgh, EH14 1DJ, UK.
Abstract:
This study examines how involvement in emissions trading schemes (ETS) affects firm climate regulatory risks (FCRR) across 36 countries from 2003 to 2021. We find a positive link between ETS membership and FCRR. Furthermore, we investigate how governance structures and firm-specific factors influence this relationship. Our analysis indicates that factors such as financial constraints, CEO network size, CEO tenure, the number of independent directors, and board size can lessen the impact of ETS membership on FCRR. Conversely, higher corporate political risk, membership in carbon-intensive industries, and a greater number of co-opted board members intensify this effect. Early participation in the scheme appears to reduce the firms' climate regulatory risk, while subsequent withdrawal increases it. Notably, the influence of ETS on FCRR is mainly observed among firms operating in developed economies. Legislative shocks, such as the EU Climate and Energy Package, diminish the positive effect of the ETS on FCRR. Overall, our findings highlight the sensitivity of firm-level climate regulatory risk to strategic decisions regarding ETS participation and exit.
Related Concept Videos
Global Regulatory Systems
What is Climate?
Global Climate Change
Drug Control Governance: Regulatory Bodies and Their Impact
Types of Biopharmaceutical Studies: Controlled and Non-Controlled Approaches
Non-controlled studies, commonly employed for initial exploration, lack a control group, rendering them susceptible to biases and external influences. In contrast,...
The Carbon Cycle

