CEO inside debt holdings and climate risk concerns in corporate acquisition

Yueying Su, Jialong Li, Zhicheng Li and Cathy Wu

Finance Research Letters, 2025, vol. 71, issue C

Abstract: This study examines how CEO inside debt holdings motivate CEOs to incorporate climate risk in corporate acquisition decisions through deal selection and valuation. Using samples of intended and completed acquisitions executed by U.S. acquirers from 2006 to 2021, we find that when acquirers consider a target firm with a greater exposure to climate risk, acquirers with a higher level of CEO inside debt choose to discount their valuation for the target firm rather than drop the deal completely. These results suggest that CEO's debt-like compensation can be used to encourage CEOs to take climate risk concerns into their investment decisions.

Keywords: Climate risk; Corporate acquisition; Inside debt; Acquisition premium (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324015022

DOI: 10.1016/j.frl.2024.106473

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