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Climate change exposure and the use of short-term debt

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  • Choi, Sanghak

Abstract

This study investigates the relationship between a firm's exposure to climate change and its preference for short-term debt. Using a comprehensive dataset of U.S. firms from 2002 to 2020 and employing a novel measure of firm-specific climate change exposure, the findings indicate that firms with high exposure are more likely to use short-term debt, particularly for opportunity-related climate change exposure. Propensity score matching and additional robustness analyses support the robustness of our findings. In addition, cross-sectional subsample analyses further suggest that the effect is magnified in climate-sensitive groups and financially constrained firms.

Suggested Citation

  • Choi, Sanghak, 2024. "Climate change exposure and the use of short-term debt," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006093
    DOI: 10.1016/j.frl.2024.105579
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    Cited by:

    1. Zhou, Mengling & Huang, Zizhen & Jiang, Kangqi, 2024. "Environmental, social, and governance performance and corporate debt maturity in China," International Review of Financial Analysis, Elsevier, vol. 95(PA).

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    More about this item

    Keywords

    Debt maturity choice; Short-term debt; Climate change exposure;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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