IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v216y2023icp670-685.html
   My bibliography  Save this article

The effect of extreme rainfall on corporate financing policies

Author

Listed:
  • Chen, Sicen
  • Liu, Siyi
  • Zhang, Junsheng
  • Zhang, Pengdong

Abstract

In recent years, a series of intense precipitation events has drawn public attention to the issue of extreme rainfall. This study examines the impact of precipitation anomalies on corporate financing policies and reveals that firms tend to increase their utilization of long-term debt (while decreasing their reliance on short-term debt), enhance cash reserves, and reduce cash dividend payouts in response to heightened occurrences of extreme rainfall. We provide empirical evidence indicating that such weather events can have adverse effects on firms' operational activities. The influence of extreme precipitation is particularly pronounced in sectors sensitive to rainfall, firms with geographically concentrated factories, non-state-owned enterprises, and those located in cities with limited financial institutions. Overall, this research demonstrates that firms are inclined to adjust their financing policies in response to extreme rainfall events, underscoring the significance of financial resilience in managing climate risks and shedding light on firms' financing decisions.

Suggested Citation

  • Chen, Sicen & Liu, Siyi & Zhang, Junsheng & Zhang, Pengdong, 2023. "The effect of extreme rainfall on corporate financing policies," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 670-685.
    • Handle: RePEc:eee:jeborg:v:216:y:2023:i:c:p:670-685
    DOI: 10.1016/j.jebo.2023.11.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268123004055
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2023.11.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:216:y:2023:i:c:p:670-685. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.