Theses and Dissertations

Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)


Business Administration

First Advisor

Dr. Siamak Javadi

Second Advisor

Dr. Incheol Kim

Third Advisor

Dr. Nam H. Nguyen


This dissertation consists of two essays on the finance of climate change. In the first essay, we find robust empirical evidence that firms in locations with higher exposure to climate change pay significantly higher spreads on their bank loans. To alleviate the concerns related to using firms’ headquarters in determining climate risk exposure, we exploit the economic link between a firm and its customers and find that the exposure of a firm’s customers to climate risk also adversely affects that firm’s cost of borrowing. In the cross-section, we find that the long-term loans of poorly rated firms drive the effect. Overall, our evidence suggests that lenders increasingly view climate change as a relevant risk factor.

In the second essay, using data from 41 different countries including the United States, we provide novel empirical evidence that firms increase their cash holdings as a response to climate risk. This effect is driven by financially constrained firms and becomes significantly stronger after the release of the Stern Review that improved awareness about climate risk. Results fit consistently within the precautionary motive framework and suggest that firms have been trying to hedge against climate risk by holding more cash.


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