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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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    Cited by:

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    2. Tran, Ly Thi Hai & Ho, Tuan & Ho, Hoai Thu & Phung, Nam Duc, 2024. "Climate vulnerability and capital structure: Moderating effect of financial development, financial constraints, and 2015 Paris Agreement," International Review of Economics & Finance, Elsevier, vol. 96(PC).
    3. Jawadi, Fredj & Rozin, Philippe & Cheffou, Abdoulkarim Idi, 2025. "Climate change uncertainty and corporate debt relationship: A quantile panel data analysis," Journal of International Money and Finance, Elsevier, vol. 154(C).
    4. Muhammad Umar & Farzan Yahya & Amad Rashid, 2025. "Climate risk and loan pricing: the moderating role of trilemma policy choices," Economic Change and Restructuring, Springer, vol. 58(4), pages 1-40, August.
    5. Wuqi Song & Wenshuai Xu & Wenzhou Qu & Xu Gong, 2024. "Climate risk exposure and debt concentration: Evidence from Chinese listed companies," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 3361-3386, December.
    6. Md Lutfur Rahman & Sudipta Bose, 2025. "Firm-level Climate Vulnerability and Corporate Risk-taking: International Evidence," Working Papers DP-2024-36, Economic Research Institute for ASEAN and East Asia (ERIA).
    7. Fenghua Wen & Jinmei Ju, 2026. "Climate Risk Exposure and Corporate Internationalisation: Evidence From China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(1), pages 695-721, March.
    8. Jinli Wang & Qiyong Xiao & Xin Han, 2026. "Curbing Corporate Environmental, Social and Governance Greenwashing Through Centralisation of Environmental Monitoring: Evidence From China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(1), pages 657-694, March.
    9. Dallocchio, Maurizio & D’Ercole, Francesco & Frascati, Domenico & Mariani, Massimo, 2025. "Climate transition and the speed of leverage adjustment," International Review of Financial Analysis, Elsevier, vol. 102(C).
    10. Mertzanis, Charilaos & Kampouris, Ilias & Samitas, Aristeidis, 2025. "Climate change and U.S. Corporate bond market activity: A machine learning approach," Journal of International Money and Finance, Elsevier, vol. 151(C).
    11. Ma, Rufei & Fu, Xinxin & Ji, Qiang & Zhai, Pengxiang, 2024. "Do climate-exposed firms hold more cash? Global evidence," Economics Letters, Elsevier, vol. 237(C).
    12. Sun, Yuan & Sun, Xiaowei & Wang, Zehao, 2024. "Climate risk exposure and geographical allocation of business activities: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 59(C).
    13. Liu, Yang & Dong, Kangyin & Nepal, Rabindra & Afi, Hatem, 2025. "How do climate risks affect corporate ESG performance? Micro evidence from China," Research in International Business and Finance, Elsevier, vol. 76(C).
    14. Bai, Min & Qiu, Zihang & Yu, Chia-Feng (Jeffrey), 2024. "Bond market access and corporate financing decisions: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 68(C).
    15. Song, Yanheng & Xian, Rui, 2024. "Institutional investors' corporate site visits and firm-level climate change risk disclosure," International Review of Financial Analysis, Elsevier, vol. 93(C).
    16. Yongliang Yang & Shijia Xie & Yi li, 2026. "Temperature shocks and corporate innovation: evidence from China," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 13(1), pages 1-14, December.
    17. Silvia-Andreea Peliu, 2024. "Exploring the impact of ESG factors on corporate risk: empirical evidence for New York Stock Exchange listed companies," Future Business Journal, Springer, vol. 10(1), pages 1-34, December.
    18. He, Feng & Duan, Lin & Cao, Yi & Wen, Shuyang, 2024. "Green credit policy and corporate climate risk exposure," Energy Economics, Elsevier, vol. 133(C).

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    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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