Cash-rich Firms and Carbon Emissions

Date

2022-03-09

Advisors

Journal Title

Journal ISSN

ISSN

1057-5219

Volume Title

Publisher

Elsevier

Type

Article

Peer reviewed

Abstract

We investigate whether corporate cash holdings affect carbon dioxide emissions. Using a sample of 5,402 firm-years observations from 943 U.S firms during 2007–2017, we find that carbon emissions are lower in firms with higher corporate cash holdings. The effect of cash holdings on carbon emissions is more pronounced in firms with low leverage and less financial constraints. Our channel analysis further unveils that renewable energy consumption and carbon abatement investment are higher in cash-rich firms, which transmit lower carbon emissions. Our findings are robust to different identification strategies and alternative measures of cash holdings and carbon emissions. Overall, our paper provides novel evidence on the role of corporate cash holdings in mitigating carbon emissions.

Description

The file attached to this record is the author's final peer reviewed version. open access article

Keywords

Cash holdings, Carbon emissions, Renewable energy consumption, Carbon abatement investment.

Citation

Alam, M.S. et al. (2022) Cash Rich Firms and Carbon Emissions. International Review of Financial Analysis, 81, 102106

Rights

Research Institute

Institute for Applied Economics and Social Value (IAESV)