Corporate social responsibility, carbon footprints and stock market valuation.

The emission of greenhouse gases (GHG), particularly carbon dioxide (CO2), within the atmosphere poses serious threats to society and the environment. In this paper, we examine the effect of carbon dioxide (CO2) emissions on the association between corporate social responsibility (CSR) and stock valuation. Using a sample of listed non‐financial US firms from 2002 through 2018, we find that CO2 emission plays a moderating role in reshaping the CSR‐stock valuation nexus. Further analysis showed that our results are robust for using alternate proxies of CSR, CO2, additional control and methods to alleviate endogeneity concerns. Additionally, we explored how increasing carbon footprints reshape this association only for firms with strong governance structures. Overall, our results indicate that the positive impact of CSR on stock valuation is overlaid by corporate CO2 emission. The practical and theoretical insights of this study were explored. [ABSTRACT FROM AUTHOR]