Do carbon assurance providers play a strategic role in moderating the relationship between carbon emissions and firms' cost of equity?

This study investigates the impact of a firm's total carbon emissions on itsimplied cost of equity capital (COE) and explores whether this relationship ismoderated by the choice of carbon assurance provider. Our findings showthat firms aligning with the shared societal objective of minimizing totalcarbon emissions can lower their COE, consequently increasing their overallvalue. This association is enhanced when a firm's carbon emissions areassured by a professional accountant instead of a specialist consultant. Thishighlights the potential for green firms to maximize their value through thestrategic involvement of a professional accountant. By doing so, these firmscan proficiently convey and authenticate their corporate sustainabilityachievements to investors and other stakeholders. Our findings underscorethe importance for a firm to carefully consider the reputation andindependence of the assurance provider when seeking carbon assurance.