Does climate policy uncertainty really affect corporate financialization?

35 Pages Posted: 20 Apr 2022

See all articles by Xiaohang Ren

Xiaohang Ren

University of Southampton; Central South University

Weichen Li

Central South University

Kun Duan

University of Southampton - Southampton Business School; Huazhong University of Science and Technology

Xinru Zhang

Central South University

Date Written: April 9, 2022

Abstract

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

Suggested Citation

Ren, Xiaohang and Li, Weichen and Duan, Kun and Zhang, Xinru, Does climate policy uncertainty really affect corporate financialization? (April 9, 2022). Available at SSRN: https://ssrn.com/abstract=4079217 or http://dx.doi.org/10.2139/ssrn.4079217

Xiaohang Ren

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Central South University ( email )

Changsha, Hunan 410083
China

Weichen Li

Central South University ( email )

Changsha, Hunan 410083
China

Kun Duan (Contact Author)

University of Southampton - Southampton Business School ( email )

Southampton, SO17 1BJ
United Kingdom

Huazhong University of Science and Technology ( email )

1037 Luoyu Road
Wuhan, Hubei 430074
China

Xinru Zhang

Central South University ( email )

Changsha, Hunan 410083
China

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