Does climate policy uncertainty really affect corporate financialization?
35 Pages Posted: 20 Apr 2022
Date Written: April 9, 2022
In recent years, disasters caused by climate change have brought marked losses to individual economic agents. To cope with fluctuating climate risks, climate policies have witnessed frequent adjustments worldwide, resulting in heightening uncertainty on climate policies that have become an important factor affecting business operations. This paper uses a fixed-effects model to study the role of climate policy uncertainty on the financialization of China's A-share listed enterprises. Our results find that a rise in climate policy uncertainty has a dampening effect on corporate financialization, while energy-intensive enterprises are most affected. Although climate policy uncertainty negatively impacts the size of enterprises' financial assets, the impact varies for different types of financial assets. This paper fills the gap by investigating the relationship between climate policy and corporate financialization. Under the backdrop of a rising climate policy uncertainty, our findings possess important implications for the improvement of enterprises' business strategies and policy effectiveness against global climate change.
Keywords: Climate policy uncertainty; Corporate financialization; Financial asset allocation
JEL Classification: C33; O13; D21; P28; Q43
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