Do climate-exposed firms hold more cash? Global evidence

Abstract

Using a novel global dataset covering firm-level climate change exposure, this paper observes that firms facing greater climate change exposure are significantly holding more cash. This finding is consistent after a series of robustness tests. We further document that more stringent climate policies and greater economic uncertainty amplify the effect of climate change on corporate cash holdings, and firms in countries with more developed capital market are increasing less cash reserves in response to climate change.