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Corporate climate risk exposure and stock liquidity: New evidence based on heterogeneous environmental regulation

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  • Qiu, Yixin
  • Chen, Jinyu
  • Ding, Qian

Abstract

The increasing climate risk brought by climate change to businesses is becoming a complex and important challenge faced by global firms. This study explores the relationship between corporate climate risk exposure (CCRE) and stock liquidity with a sample of Chinese A-share listed enterprises from 2011 to 2020. The results show that CCRE significantly reduces the stock liquidity. Specifically, compared with climate physical risk exposure (CPRE), climate transition risk exposure (CTRE) has a more pronounced negative impact on the stock liquidity. Moreover, government environmental regulation has a significantly positive moderating effect on the above negative relationship. Public environmental attention significantly positively moderates the relationship between CCRE, CTRE and stock liquidity, but the moderating effect in CPRE and stock liquidity is not significant. Furthermore, the joint moderating effect of heterogeneous environmental regulation positively moderates the negative relationship between CCRE, CPRE and stock liquidity. Additional analysis suggests that the negative effect of CCRE on stock liquidity further reduces firm performance. This paper provides clues for understanding the liquidity of micro entities in the capital market and provides practical suggestions for better coping with corporate climate risk.

Suggested Citation

  • Qiu, Yixin & Chen, Jinyu & Ding, Qian, 2025. "Corporate climate risk exposure and stock liquidity: New evidence based on heterogeneous environmental regulation," Research in International Business and Finance, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:riibaf:v:79:y:2025:i:c:s0275531925003459
    DOI: 10.1016/j.ribaf.2025.103089
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