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Do companies care about the manifestations of climate risk? Evidence from corporate cash holdings

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  • Zhen Huang
  • Nan Yu

Abstract

Climate risk has become one of the most important risks in corporate operation. This paper investigates the impact of climate risk and its manifestations on corporate cash holdings. We find that firm-level climate risk promotes corporate cash holdings by strengthening financial constraint, and this impact is more pronounced in companies with higher media coverage. However, we find that different manifestations of climate risk have the heterogeneous effects on cash holdings. Specifically, meteorological climate risk can significantly increase corporate cash holdings, while geological climate risk does not. These results provide valuable new insights in corporate climate risk management and cash management.

Suggested Citation

  • Zhen Huang & Nan Yu, 2025. "Do companies care about the manifestations of climate risk? Evidence from corporate cash holdings," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 32(5), pages 987-1005, September.
    • Handle: RePEc:taf:raaexx:v:32:y:2025:i:5:p:987-1005
    DOI: 10.1080/16081625.2025.2521316
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    Cited by:

    1. Huang, Zhen & Dou, Tianyu, 2026. "The spillover effect of customer extreme climate risk: Evidence from supplier trade credit," The North American Journal of Economics and Finance, Elsevier, vol. 81(C).

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