 How does climate risk affect corporate financialization?Teng Yuan Cheng, Liang Dong, Yuxuan Dong and Keith S.K. Lam Research in International Business and Finance, 2025, vol. 78, issue C Abstract: Using a sample of Chinese A-share listed firms from 2010 to 2020 and a local climate risk measure synthetizing meteorological observations, this paper examines the impact of climate risk on corporate financialization. We document the following new findings. First, climate risk has a significant inhibitory effect on corporate financialization. Second, climate risk negatively affects firms’ financialization by exacerbating cash flow shortages and liquidity uncertainty. The reduction in financialization is larger among firms with excessive financialization, private ownership, weak external financing ability, and small size. Lastly, the reduction in financialization caused by climate risk has an inverse-U shape effect on corporate value, dampening firm value in the short term due to increased real and R&D investments but enhancing firm value in the longer term. This study highlights the need for firms to integrate climate risk into their financial investment strategies. Keywords: Climate risk; Corporate financialization; Asset allocation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:78:y:2025:i:c:s0275531925002107 DOI: 10.1016/j.ribaf.2025.102954 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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