In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show however, that competition for repayment among lenders may result in a sovereign debt that is...

In their indisposed paper, Aswani, Raghunandan, and Rajgopal (ARR) provide a critique of our main findings on the pricing of carbon transition risk in Bolton and Kacperczyk (2021a, 2021b, 2022) and in Bolton, Halem, and Kacperczyk (2022). We take exception to the key elements of their critique....