Söhnke Bartram

The authors greatly appreciate helpful comments and suggestions from Douglas Diamond, Winston Dou, Andrea Eisfeldt, Chang He, Amy Huber, Steven Ho, Oleg Itskhoki, Urban Jermann, Lorena Keller, Martin Lettau, Karen Lewis, Ye Li, Hanno Lustig, Robert Richmond, Samuel Rosen, and Nikolai Roussanov, as well as seminar participants at Citigroup, the 2024 Citrus Finance Conference, State University of Jakarta, Temple University, UCLA, University of Macau, and Villanova University.

Skip to main content Respectively, Professor of Finance, University of Warwick, and CEPR, Weatherspoon Distinguished Professor of Finance, Kenan-Flagler Business School, The University of North Carolina at Chapel Hill, and Everett D. Reese Chair of Banking and Monetary Economics, Fisher College of Business, The Ohio State University, NBER, and ECGI.

How effective are climate change policies, and what are the important considerations to ensure they are effective? This column shows that firms respond to climate change policies with regulatory arbitrage so that localised policies aimed at mitigating climate risk can have unintended consequences. Studying the impact of the California cap-and-trade programme, it shows that firms without financial constraints do not reduce their emissions in response to the policy.