Climate Change Exposure and Corporate Financial Policy: International Evidence

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Tuesday 09 May 2023

02:00 PM - 04:00 PM


CC1.4, Coventry University Technology Park, Puma Way, Coventry, CV1 2TT

Event details

This event by the Centre for Financial and Corporate Integrity will discuss the impact of climate change on corporate financial policies.


This paper investigates the effect of climate change on corporate financial policies. Using a large sample of firms from 34 countries, we find that firms with high climate change exposures reduce their leverage, capital expenditure and dividends. However, firms increase cash holdings in response to heightened climate risk. Our results are robust after controlling for alternative measures of climate risk, country-year fixed effects and the COVID-19 pandemic.

The effect of climate change exposures on corporate financial policies is more pronounced for firms that suffer from greater financial constraints and are more vulnerable to climate risk and under higher public climate-related attention. We further report that after the Paris Agreement, firms that are exposed to more climate change have lower leverage and capital expenditure, pay less dividends and hoard more cash.


Professor Andros Gregoriou is a world leading researcher in the field of stock market liquidity. He is particularly interested in developing new measures of liquidity, how liquidity reacts to news, carbon markets and the liquidity of zero leverage firms. More recently, his research has also included liquidity of SMEs and cryptocurrencies as well as the association between liquidity and asset pricing. Andros joined Brighton Business School in 2014 as a Professor of Finance. He held senior academic positions at various universities including the University of Hull, Brunel University, and the University of East Anglia. As a world leading authority in finance, he has published extensively in leading finance journals, generated a large amount of research income and supervised numerous PhD students to completion.