The Effects of Carbon Emissions and Agency Costs on Firm Performance

Round 1

Reviewer 1 Report

The effects of carbon emissions and agency cost on firm performance

This paper investigates the impact of carbon emissions and agency costs on firms’ financial performance, both considering the individual and combined effect. The main element of novelty is represented by the investigation of the combined effect.

First, the idea behind the research is interesting. However, more elements justifying it would be required in my view. In the literature there are numerous factors influencing firms’ financial performance and carbon emissions and agency costs are among them. The authors adequately cite some of these studies in the literature review. Also, there are other factors (size, leverage, capex etc) which the authors use as control variables.

An element which needs to have a thorough justification is represented by the mechanism through which carbon emissions and agency cost have an impact taken together, especially that apparently such a thing was not studied before. Why not take the impact taken together of carbon emission and size or other factor used as a control variable? Also, related to control variables their choice could be more reflected in the literature review. Currently there aren’t many references related to this topic which could strengthen their choice in the case study.  

Interestingly the authors find a negative relationship between carbon emissions and financial performance but not so much on carbon emissions and the change in financial performance. More attention and explanations about this result would be welcomed.

The implications of the results are not presented comprehensively. More attention on this issue would be welcomed.

As a general comment the paper is coherent, there is clarity in the elements presented. The econometric work looks fine although in terms of justifications of the economic approach behind additional elements could be added.

Author Response

Please attached find the response to reviewer comments.

Author Response File: Author Response.pdf

Reviewer 2 Report

The manuscript shows a valuable regression model with an acceptable initial point and a correct set of calculations, but the comprehensive nature of the analysis is missing. Hypotheses are formulated, but an explicit response to them is not included. H1 hypothesis is double-edged, so it becomes meaningless. Moreover, the goal and wider application of the results must be added. According to the Journal, I would like to see what kind of risks are addressed. The literature review includes some recent items, but a more thorough review is required in a leading journal. Some editing issues ask for corrections.

A Turnitin check is performed that shows 30% similarity. The affected parts mainly belong to literature and methods that are acceptable. At the same time, the conclusion needs revision.

I suggest rethinking the frames of this great analysis and re-submit an improved manuscript.

Author Response

Attatched

Author Response File: Author Response.pdf

Reviewer 3 Report

This paper seems to have identified the main topics and questions, it is clearly intertwined.

Author Response

Attached

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

The paper has sufficiently improved.

My concerns were addressed.

Reviewer 2 Report

The authors followed the instructions of the previous review and made a limited but remarkable improvement to the manuscript. The content and analysis were not in question, but framing the work was critical. In the revised version, the understanding of the message is much better.

I have no other requests.