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

Zhen Huang and Nan Yu

Asia-Pacific Journal of Accounting & Economics, 2025, vol. 32, issue 5, 987-1005

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.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:taf:raaexx:v:32:y:2025:i:5:p:987-1005

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DOI: 10.1080/16081625.2025.2521316

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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