Spillover Effects of Corporate External Financing: The Role of Vietnamese Climate Policy and Carbon Performance

Abstract

This study examines the impact of climate policy on the external financing of 557 listed companies in Vietnam, along with the spillover effects of external financing among firms based on their carbon performance. Two key metrics, including Clean Development Mechanism (CDM) and Corporate Carbon Disclosure (CCD) are employed to evaluate the carbon performance of these businesses. Utilizing a Difference-In-Differences (DiD) model, the findings indicate that the policy positively influences firms engaged in the CDM and those demonstrating high levels of CCD. Furthermore, results from the Vector Autoregressions with rolling windows (VAR) model reveal that CDM firms in Vietnam are interconnected and benefit from the spillover effects of other CDM participants. Similarly, CCD firms show strong interconnectedness and mutually advantageous interactions. These findings provide actionable insights for businesses and policymakers, highlighting the importance of incorporating companies' environmental performance into financial decisions and policy adjustments within the Vietnamese context.