Resilient reserves: Climate adaptive pilot cities policy and firms’ cash holdings

IF 7.9 2区经济学 Q1 ECONOMICS

Economic Analysis and Policy Pub Date : 2025-03-27 DOI:10.1016/j.eap.2025.03.045

Changcai Luo , Dixin Cai , Junbing Xu

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引用次数: 0

Abstract

Climate mitigation and adaptation are indispensable pillars of global climate governance. Although there are growing research on studying the mitigation, it still lacks sufficient empirical evidence regarding the real economic effects of adaptation.

Adopting difference-in-differences (DID) method, our article fills above research gap through exploring whether and how Chinese 2017 climate adaptive pilot cities (CAPC) policy affects firms’ cash holdings. Results reveal that CAPC policy may lower firms' cash holdings by 10.96 % and 10.64 %, respectively. This effect is particularly prominent for non-state-owned enterprises (NSOEs) or firms located in cities with higher climate risk perception. Additionally, the reduction in cash holdings resulting from CAPC policy can be attributed to the relaxation of financing constraints, reduction of bankruptcy risk, and alleviation of agency costs. Further analysis also shows that CAPC policy may improve the value of cash holdings. This article elucidates the influence of climate adaptation on cash management from developing countries.

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来源期刊

Economic Analysis and Policy ECONOMICS-

CiteScore

9.80

自引率

9.20%

发文量

231

审稿时长

93 days

期刊介绍： Economic Analysis and Policy (established 1970) publishes articles from all branches of economics with a particular focus on research, theoretical and applied, which has strong policy relevance. The journal also publishes survey articles and empirical replications on key policy issues. Authors are expected to highlight the main insights in a non-technical introduction and in the conclusion.