The Impact of Mandatory Carbon Disclosure Regulation on Operating Lease Activities

Maria Eleni K. Agoraki; Chen Huang; Tam D. Nguyen; Yu Zhang

doi:10.1111/eufm.70031

The Impact of Mandatory Carbon Disclosure Regulation on Operating Lease Activities

Maria Eleni K. Agoraki
, Chen Huang
, Tam D. Nguyen
, Yu Zhang

Management

University of Peloponnese
Queen Mary University, London
University College Dublin

Research output: Contribution to journal › Article › peer-review

Abstract

This study examines whether mandatory carbon disclosure influences firms' financing strategies. Using the 2010 implementation of the U.S. Greenhouse Gas Reporting Program (GHGRP) as a regulatory shock, we find that affected firms increase their use of operating leases. This shift reflects a strategic response to transition risk, allowing firms to preserve financial flexibility and avoid long-term capital commitments. We identify three channels through which GHGRP impacts leasing behaviour, institutional investor pressure, increased financial constraints, and reduced investment in fixed assets. Our findings enhance understanding of how environmental regulation influences corporate capital structure and asset financing decisions.

Original language	English
Pages (from-to)	756-778
Journal	European Financial Management
Volume	32
Issue number	3
Early online date	30 Oct 2025
DOIs	https://doi.org/10.1111/eufm.70031
Publication status	Published - 30 Jun 2026

Data Availability Statement

The data used in this study are subject to third‐party restrictions. Access to the data may be granted by the authors upon reasonable request and with permission from the respective providers

Funding

The authors received no specific funding for this work.

Keywords

greenhouse gas disclosure
Greenhouse Gas Reporting Program
mandatory disclosure
operating lease activities

ASJC Scopus subject areas

Accounting
General Economics,Econometrics and Finance

Access to Document

10.1111/eufm.70031

Cite this

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abstract = "This study examines whether mandatory carbon disclosure influences firms' financing strategies. Using the 2010 implementation of the U.S. Greenhouse Gas Reporting Program (GHGRP) as a regulatory shock, we find that affected firms increase their use of operating leases. This shift reflects a strategic response to transition risk, allowing firms to preserve financial flexibility and avoid long-term capital commitments. We identify three channels through which GHGRP impacts leasing behaviour, institutional investor pressure, increased financial constraints, and reduced investment in fixed assets. Our findings enhance understanding of how environmental regulation influences corporate capital structure and asset financing decisions.",

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AB - This study examines whether mandatory carbon disclosure influences firms' financing strategies. Using the 2010 implementation of the U.S. Greenhouse Gas Reporting Program (GHGRP) as a regulatory shock, we find that affected firms increase their use of operating leases. This shift reflects a strategic response to transition risk, allowing firms to preserve financial flexibility and avoid long-term capital commitments. We identify three channels through which GHGRP impacts leasing behaviour, institutional investor pressure, increased financial constraints, and reduced investment in fixed assets. Our findings enhance understanding of how environmental regulation influences corporate capital structure and asset financing decisions.

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The Impact of Mandatory Carbon Disclosure Regulation on Operating Lease Activities

Abstract

Data Availability Statement

Funding

Keywords

ASJC Scopus subject areas

Access to Document

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