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CEO inside debt holdings and climate risk concerns in corporate acquisition

Author

Listed:
  • Su, Yueying
  • Li, Jialong
  • Li, Zhicheng
  • Wu, Cathy

Abstract

This study examines how CEO inside debt holdings motivate CEOs to incorporate climate risk in corporate acquisition decisions through deal selection and valuation. Using samples of intended and completed acquisitions executed by U.S. acquirers from 2006 to 2021, we find that when acquirers consider a target firm with a greater exposure to climate risk, acquirers with a higher level of CEO inside debt choose to discount their valuation for the target firm rather than drop the deal completely. These results suggest that CEO's debt-like compensation can be used to encourage CEOs to take climate risk concerns into their investment decisions.

Suggested Citation

  • Su, Yueying & Li, Jialong & Li, Zhicheng & Wu, Cathy, 2025. "CEO inside debt holdings and climate risk concerns in corporate acquisition," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324015022
    DOI: 10.1016/j.frl.2024.106473
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