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Relationship Between Climate Risk and Physical and Organizational Capital

Author

Listed:
  • Kiridaran Kanagaretnam

    (York University)

  • Gerald Lobo

    (University of Houston)

  • Lei Zhang

    (York University)

Abstract

We investigate the relationship between climate risk and corporate investment in physical and organizational capital using an international sample of firms from 39 countries. Our main findings show that climate risk is positively associated with physical capital but is negatively related to organizational capital. We also explore the effects of climate vulnerability on these relationships and find that the positive relationship between climate risk and physical capital is mainly driven by climate-nonvulnerable industries, while the negative relationship between climate risk and organizational capital is principally driven by climate-vulnerable industries. Overall, our findings have significant implications for both domestic and multinational enterprises that engage in long-term investments against the background of climate change.

Suggested Citation

  • Kiridaran Kanagaretnam & Gerald Lobo & Lei Zhang, 2022. "Relationship Between Climate Risk and Physical and Organizational Capital," Management International Review, Springer, vol. 62(2), pages 245-283, April.
    • Handle: RePEc:spr:manint:v:62:y:2022:i:2:d:10.1007_s11575-022-00467-0
    DOI: 10.1007/s11575-022-00467-0
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    Cited by:

    1. Lee, Chien-Chiang & Wang, Chih-Wei & Thinh, Bui Tien, 2023. "Green development, climate risks, and cash flow: International evidence," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).

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    More about this item

    Keywords

    Climate risk; Corporate investment; Physical capital; Organizational capital;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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