Climate Change Social Norms and Corporate Cash Holdings

Lei Zhang (), Kiridaran Kanagaretnam () and Jing Gao ()
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Lei Zhang: Xi’an Jiaotong-Liverpool University
Kiridaran Kanagaretnam: York University
Jing Gao: Capital University of Economics and Business

Journal of Business Ethics, 2024, vol. 190, issue 3, No 8, 683 pages

Abstract: Abstract We study the relationship between climate change social norms (CCSN) and corporate cash holdings for U.S. firms. We find that county-level CCSN is significantly positively associated with cash holdings. Our main finding is robust to a battery of robustness tests. In a subsample analysis, we find that firms have relatively low cash holdings in low CCSN counties even when faced with high climate risk. For such firms, the lack of cash buffer could be harmful to a broader set of stakeholders faced with heightened climate risk. We also show that cash holdings are a potential mechanism through which CCSN influences future environmental corporate social responsibility (CSR) performance. Overall, our study suggests that county-level CCSN has significant implications for corporate cash holdings.

Keywords: Climate change; Social norms; Cash holdings; Climate risk (search for similar items in EconPapers)
JEL-codes: G32 Z1 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10551-023-05440-x

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