Essays in climate finance

Abstract

This thesis investigates the behaviour of firms in relation to \emph{climate-transition} events, so-called events that occur as part of the transition to a green economy to prevent climate change. The first chapter looks at the current development of the sustainable finance market to study how green securities should be optimally designed and whether measurement and information frictions can explain observed cross-sectional issuance patterns. The second chapter exploits a climate regulatory announcement to study how firms' beliefs about climate regulation affect their emissions abatement plans and how they interact with cross-firm reputation externalities. The third chapter makes use of an environmental policy implemented in the United Kingdom to study the cost-effectiveness of carbon pricing policies subject to carbon leakage risk and asymmetric information.