Climate Change and Corporate Cash Holdings: Global Evidence

By Abdullah Al Masum, S. Javadi, Mohsen Mollagholamali, R. Rao. Social Science Research Network, 2020

115 citations recorded by the source corpus.

Using data from 41 different countries including the United States, we provide novel empirical evidence that firms increase their cash holdings as a response to climate risk. This effect is driven by financially constrained firms and becomes significantly stronger after the release of the Stern Review that improved awareness about climate risk. Results fit consistently within the precautionary motive framework and suggest that firms have been trying to hedge against climate risk by holding more cash.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/ac9439f01a29a16357d397043889982410a285e7