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Corporate climate risk exposure and capital structure: Evidence from Chinese listed companies

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  • Li, Yunhe
  • Zhang, Zhaolong

Abstract

This study investigates how corporate climate risk exposure (CCRE) affects corporate capital structure. We find that CCRE significantly reduces corporate financial leverage, and the result still holds after robustness tests. We further find that the negative impact of CCRE on corporate financial leverage is partly driven by both the corporate capital demand and debt supply effects. We also find that this relationship is more significant for companies with higher physical risk and transition risk. These results suggest that corporate capital structure decisions -change in response to CCRE.

Suggested Citation

  • Li, Yunhe & Zhang, Zhaolong, 2023. "Corporate climate risk exposure and capital structure: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finlet:v:51:y:2023:i:c:s154461232200664x
    DOI: 10.1016/j.frl.2022.103488
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate climate risk exposure; Capital structure; Equity issuance; Credit rating; China;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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