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Climate awareness in management and deviation from target leverage: Evidence from China

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  • Ma, Rufei
  • Fu, Xinxin
  • Ji, Qiang
  • Zhai, Pengxiang

Abstract

We explore the impact of managerial climate attention on leverage deviation (i.e., the distance between actual leverage and the target leverage). The results show that greater managerial attention to climate issues is associated with smaller deviations from target leverage in the future, indicating that managers concerning climate issues tend to achieve a more optimized capital structure. This effect is robust to potential leverage measure bias, confounding effect of external crisis, and sample selection bias. Moreover, this effect is more pronounced in firms with concentrated ownership, significant institutional holdings, and government ownership, emphasizing the critical role that ownership structure plays in this relationship.

Suggested Citation

  • Ma, Rufei & Fu, Xinxin & Ji, Qiang & Zhai, Pengxiang, 2025. "Climate awareness in management and deviation from target leverage: Evidence from China," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001795
    DOI: 10.1016/j.frl.2025.106915
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