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Climate Change Social Norms and Corporate Cash Holdings

Author

Listed:
  • Lei Zhang

    (Xi’an Jiaotong-Liverpool University)

  • Kiridaran Kanagaretnam

    (York University)

  • Jing Gao

    (Capital University of Economics and Business)

Abstract

We study the relationship between climate change social norms (CCSN) and corporate cash holdings for U.S. firms. We find that county-level CCSN is significantly positively associated with cash holdings. Our main finding is robust to a battery of robustness tests. In a subsample analysis, we find that firms have relatively low cash holdings in low CCSN counties even when faced with high climate risk. For such firms, the lack of cash buffer could be harmful to a broader set of stakeholders faced with heightened climate risk. We also show that cash holdings are a potential mechanism through which CCSN influences future environmental corporate social responsibility (CSR) performance. Overall, our study suggests that county-level CCSN has significant implications for corporate cash holdings.

Suggested Citation

  • Lei Zhang & Kiridaran Kanagaretnam & Jing Gao, 2024. "Climate Change Social Norms and Corporate Cash Holdings," Journal of Business Ethics, Springer, vol. 190(3), pages 661-683, March.
    • Handle: RePEc:kap:jbuset:v:190:y:2024:i:3:d:10.1007_s10551-023-05440-x
    DOI: 10.1007/s10551-023-05440-x
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    More about this item

    Keywords

    Climate change; Social norms; Cash holdings; Climate risk;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Z1 - Other Special Topics - - Cultural Economics

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