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Corporate climate risk disclosure and financing constraints: Evidence from China

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  • Gao, Yongjun
  • Saleh, Norman Mohd
  • Abdullah, Ahmad Monir
  • Adznan, Syaima’

Abstract

Using Chinese A-share listed companies (2008–2021), this study examines the impact of corporate climate risk disclosure on financing constraints as a reaction to the growing capital market attention to corporate climate risk. Corporate climate risk disclosure is measured through textual analysis, employing term frequency-inverse document frequency and cosine similarity on annual reports. Financing constraints are proxied by the Kaplan-Zingales index, with the Whited-Wu index used for robustness. Employing fixed-effects regression models, results reveal that corporate climate risk disclosure significantly alleviates financing constraints, mediated by information transparency, measured as institutional holdings, and corporate reputation, assessed via factor analysis scores. This effect is more pronounced in polluting industries, state-owned enterprises, and non-eastern regions, as confirmed by heterogeneity analyses. Robustness and endogeneity tests verify our findings. This study offers practical insights concerning how improved climate risk disclosure can effectively alleviate financing constraints for corporate managers and policymakers.

Suggested Citation

  • Gao, Yongjun & Saleh, Norman Mohd & Abdullah, Ahmad Monir & Adznan, Syaima’, 2025. "Corporate climate risk disclosure and financing constraints: Evidence from China," Finance Research Letters, Elsevier, vol. 85(PD).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pd:s1544612325014394
    DOI: 10.1016/j.frl.2025.108184
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    References listed on IDEAS

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