This paper empirically examines the impact of exposure to climate change risk on the firm's financing decisions. We study publicly traded firms listed in the U.S. from Compustat between 2002 and 2020. Our analysis contributes to the literature by establishing a direct relationship between...

Using a large sample of firms across 35 countries from 2001 to 2021, we show a significantly positive association between a firm's climate risk exposure and speed of leverage adjustment. A plausible explanation is that climate risk exposure mitigates agency conflicts and improves information...

We document that climate uncertainty negatively affects corporate investment. The effect is more pronounced for firms with higher capital intensity, higher operating inflexibility, and less redeployable capital. Our results are robust to using an instrumental variable approach and to using...

Using firm-level R&D and patent data for 88 countries, we find that country climate vulnerability negatively affects firms’ R&D investment and innovation performance. This effect operates through the decreased responsiveness of R&D investment to investment opportunities (i.e., investment...

Using data from 41 different countries including the United States, we provide novel empiricalevidence that firms increase their cash holdings as a response to climate risk. This effect is drivenby financially constrained firms and becomes significantly stronger after the release of the...

We examine how climate change affects bank fragility. We find both physical and transitional climate changes lead to substantial increase in systemic risk. The effect is more pronounced for banks with higher climate change exposure, higher loan portfolio synchronicity, and higher bank default...

Although a growing number of investors are engaging with sovereign entities on environmental, social, and governance (ESG) issues, little academic research investigates this new form of investor activism. Applying universal ownership theory and drawing on eleven case studies of policy...

This paper investigates how political uncertainty affects firms’ climate risk premium from a global point of view. We use the presidential election events in the United States as well as that from all countries with a stock market as proxies for political uncertainty. We find that the global...

We use new data measuring forward-looking physical climate risk at the firm level to examine the impact of climate risk on capital structure. We find that greater climate risk leads to lower leverage in the post-2015 period, i.e., after the Paris Agreement. Our results hold after controlling for...