Topic: Nothing environmental, it's just business

Date: December 5, 2025 (Friday)

Time: 12:00 - 13:00

Venue: T1-302-R1

Language: English

Please register for the seminar by scanning the QR code in the poster or logging in the MIS Survey system: https://mis.bnbu.edu.cn/survey/ before 4:00 p.m. on Dec. 4 to facilitate our arrangements for refreshments. Seats are available on a first-come, first-served basis.

Abstract: Do environmental courts (EC) incentivize firms to reduce their environmental impact? Our model shows varied firm responses to EC. We describe a firm's environmental social cost as an expected loss from climate litigation risk, which escalates post-EC. Firms hedge by reducing output, and heavier polluters reduce more. This holds for small price-taking firms. But larger firms with market power raise prices to reduce less output, despite being heavier polluters. Empirically, we measure firms' hedging by their reduced return sensitivity to climate policy news. The results align with the model: small firms show reduced sensitivity, and the effect intensifies monotonically from high to low ESG portfolio. In contrast, larger firms with low ESG scores show weak or insignificant hedges, suggesting the EC has limited impact on larger polluters.

About the Speaker: Prof. Michael T. Chng is a Professor of Finance at the International Business School Suzhou (IBSS) at Xi’an Jiaotong-Liverpool University (XJTLU). During his two terms as Associate Dean for Research, IBSS became the youngest business school in history to achieve AACSB-EQUIS-AMBA triple-crown accreditation. Michael earned his PhD from the Department of Finance, University of Melbourne. He has published in the Journal of Econometrics, Journal of Banking and Finance, Journal of Business Finance and Accounting and Journal of Futures Markets, a number of which are single-authored papers. Michael has received best paper awards and honorary mentions from various conferences, including AsianFA, Australasian Banking and Finance Meeting, FMA U.S, Asia-Pacific Association of Derivatives Meeting, International Conference on Futures and Derivative Markets, and Securities and Financial Markets Conference. His current research includes arbitrage mechanisms in financial markets, and machine-learning applications to empirical asset pricing.