Climate risk and capital structure
Edith Ginglinger and
Quentin Moreau
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Quentin Moreau: Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
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Abstract:
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 firm characteristics known to determine leverage, including credit ratings and several fixed effects. Our evidence shows that the reduction in debt related to climate risk is shared between a demand effect (the firm's optimal leverage decreases) and a supply effect (lenders, especially bankers, reduce their lending to companies with the greatest risk).
Keywords: Capital Structure; Leverage; Credit Rating; Natural Disasters (search for similar items in EconPapers)
Date: 2019-05
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Citations: View citations in EconPapers (33)
Published in 9th Financial Engineering and Banking Society international Conference, May 2019, Prague, Czech Republic
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Journal Article: Climate Risk and Capital Structure (2023) 
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02291383
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