Variables of the study
| Variables | Explanation and measurement |
|---|---|
| Dependent variables | |
| ASSU ASSUQ1 ASSUQ2 ASSUQ3 | A dummy dependent variable coded 1 if the firm undertakes external assurance of Scope 1 emissions and 0 otherwise A dummy dependent variable coded 1 if a firm has Scope 1 carbon emissions assured by an audit firm and is 0 otherwise A dummy dependent variable coded 1 if a firm has Scope 1 carbon emissions assured with a reasonable assurance level and is 0 otherwise A dummy dependent variable coded 1 if a firm has Scope 1 carbon emissions assured with high-quality assurance standards (ISAE 3000) and is 0 otherwise |
| Independent variables | |
| CBS | Climate board governance score as the sum of (1) existence of a climate board committee (CC), (2) a critical mass of female directors on the board (BGD) and (3) the inclusion of climate-related executive compensation (CEC), 0 = otherwise |
| CC (robustness checks) | A dummy independent variable coded 1 if board committee or senior managers take direct responsibility for matters related t to climate change and is 0 otherwise |
| BGD (robustness checks) | A dummy independent variable coded 1 if a critical mass of at least three women or 30% on the board of directors exist, 0 = otherwise |
| CEC (robustness checks) | A dummy independent variable coded 1 if a firm’s employees are provided incentives to reduce carbon emissions and is 0 otherwise |
| Control variables | |
| Climate variables: INT INI CT | Natural logarithm of total carbon emissions scope 1 divided by total revenue The logarithm of one plus the number of initiatives a firm takes to reduce its carbon emissions Carbon transparency score, which is publicly available from CDP, scored based on the carbon disclosure leadership index (CDLI) methodology |
| Other firm variables: | |
| IND | (Independent board members/total number of board members) × 100 |
| BSIZE | Number of board members |
| BMEET | Number of board meetings |
| DUAL | Dummy variable for (1) CEO is (ex-)board chair (0) otherwise |
| SIZE | Natural log of total assets of the firm |
| ROA | Return on assets = {Net income before preferred dividends + ([interest expense on debt-interest capitalized] × [1− tax rate])}/average of last year’s and current year’s total assets × 100 |
| DEBT | Total debt/total assets |
| TOBIN | (Market value of equity + liabilities)/(book values of equity + liabilities) |
| YEAR | Year fixed effects |
| INDU | Industry fixed effects |
| Country-related governance: | |
| CIV | Dummy variable for (1) Civil law and (0) Case law |
| Variables | Explanation and measurement |
|---|---|
| ASSU | A dummy dependent variable coded 1 if the firm undertakes external assurance of Scope 1 emissions and 0 otherwise |
| CBS | Climate board governance score as the sum of (1) existence of a climate board committee (CC), (2) a critical mass of female directors on the board (BGD) and (3) the inclusion of climate-related executive compensation (CEC), 0 = otherwise |
| CC (robustness checks) | A dummy independent variable coded 1 if board committee or senior managers take direct responsibility for matters related |
| BGD (robustness checks) | A dummy independent variable coded 1 if a critical mass of at least three women or 30% on the board of directors exist, 0 = otherwise |
| CEC (robustness checks) | A dummy independent variable coded 1 if a firm’s employees are provided incentives to reduce carbon emissions and is 0 otherwise |
| Natural logarithm of total carbon emissions scope 1 divided by total revenue | |
| IND | (Independent board members/total number of board members) × 100 |
| BSIZE | Number of board members |
| BMEET | Number of board meetings |
| DUAL | Dummy variable for (1) CEO is (ex-)board chair (0) otherwise |
| SIZE | Natural log of total assets of the firm |
| ROA | Return on assets = {Net income before preferred dividends + ([interest expense on debt-interest capitalized] × [1− tax rate])}/average of last year’s and current year’s total assets × 100 |
| DEBT | Total debt/total assets |
| TOBIN | (Market value of equity + liabilities)/(book values of equity + liabilities) |
| YEAR | Year fixed effects |
| INDU | Industry fixed effects |
| CIV | Dummy variable for (1) Civil law and (0) Case law |