Using data from 41 different countries including the United States, we find that firms increase their cash holdings when exposed to long-term adverse climate change. Our subsample analyses suggest that the increase in cash holdings is more pronounced for the firms with a cash shortfall, and for the firms that are financially constrained. Overall, our findings fit consistently within the precautionary motive framework for holding cash.
Masum, Abdullah Al and Javadi, Siamak and Mollagholamali, Mohsen and Rao, Ramesh P., Climate Change and Corporate Cash Holdings: Global Evidence (July 24, 2020). Available at SSRN: https://ssrn.com/abstract=3717092 or http://dx.doi.org/10.2139/ssrn.3717092