A European perspective on climate change and political tensions and conflicts

• Published date: 01 December 2023
• Author: William B. Elliott
• Date: 01 December 2023
• DOI: http://doi.org/10.1111/jfir.12381

DOI: 10.1111/jfir.12381

INTRODUCTION

A European perspective on climate change

and political tensions and conflicts

William B. Elliott

Department of Economics and Finance, John Carroll University

Correspondence: William B. Elliott, Department of Economics and Finance, John Carroll University, 1 John Carroll Blvd University

Heights, OH 44120.

Email: welliott@jcu.edu

1|INTRODUCTION

This special issue of the Journal of Financial Research (JFR) culminates from a symposium held at Bocconi University in

Milan, Italy, during the summer of 2023. The main focus of the symposium was on financial topics related to Europe,

particularly climate change and political tensions and conflictsastheyaffect(European)financialmarkets.The

commonality between these two seemingly unrelated topics is that both have recently caused a significant global

impact, particularly on European countries. Obviously, part of the reason is proximity, especially in the case of the war in

Ukraine. However, the EU has also been more proactive in attempting to modulate the factors contributing to climate

change. The symposium co‐editors were delighted with the quality of the papers presented, and I hope you will find this

subset of those papers of interest. Below is a synopsis of the papers included in this issue.

One of two papers in this issue that doesn't address either of the special topics but instead focuses on the more

general aspects of European finance examines the impact of board structure on firm performance (“Board structure and

market performance: Does one solution fit all?”). Unlike the extant literature that predominantly studies US firms or

country‐level data for non‐US firms, Petrova uses firm‐leveldatafrom15EUcountries.Generally,she finds that board

size and independent directors are negatively and positively related to returns, respectively. Unexpectedly, the data also

reveals that staggered boards are associated with positive market returns. However, the primary takeaway from the

paper is that there appear to be some country‐specific factors driving board composition.

In the second general paper (“Market impacts of the 2020 short‐selling bans”), Spolaore and LeMoign study

short‐selling constraints in Europe during the COVID‐19 pandemic. Across the EU, six European National

Competent Authority (NCA) joined to implement an exchange‐wide ban on short sales. However, the balance of

NCAs chose not to impose such bans. This unique natural experiment occurred in the early days of the pandemic,

from March 18, 2020, until May 18, 2020. Consistent with prior literature, they find that both liquidity and volume

decline significantly. Further, the impact of the ban on the 6 NCA countries persists after lifting the ban.

2|CLIMATE CHANGE

As the world attempts to shift to lower carbon emissions, global compacts such as the Paris Agreement are

important and result in policy shifts. However, such shifts and hopefully the resulting reduction in CO

2

, require that

lenders (in particular bank loans) alter their allocation of loans and loan rates. Bruno and Lombini (“Climate transition

J Financ Res. 2023;46:5–6. wileyonlinelibrary.com/journal/JFIR

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© 2023 The Southern Finance Association and the Southwestern Finance Association.