
Climate risk and capital structure
Moreau, Quentin; Ginglinger, Édith (2020), Climate risk and capital structure, 2020 Financial Management Association Virtual Conference, 2020-10, Online
Type
Communication / ConférenceDate
2020Conference title
2020 Financial Management Association Virtual ConferenceConference date
2020-10Conference city
OnlineMetadata
Show full item recordAuthor(s)
Moreau, QuentinDauphine Recherches en Management [DRM]
Laboratoire d'Études et de Recherche en Sociologie [LABERS]
Ginglinger, Édith
Dauphine Recherches en Management [DRM]
Abstract (EN)
We use new data that measure forward-looking physical climate risk at the firm level to examine the impact of climate risk on capital structure. We find that greater climate risk leads to lower leverage in the post-2015 period, i.e., after the Paris Agreement. Our results hold after controlling for firm characteristics known to determine leverage, including credit ratings. Our evidence shows that the reduction in leverage related to climate risk is shared between a demand effect (the firm’s optimal leverage decreases) and a supply effect (lenders increase the spreads when lending to firms with the greatest risk).Subjects / Keywords
Climate change; leverage; natural disaster; credit rating; cost of debt; Corporate Social ResponsibilityRelated items
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