Climate transition risk and corporate cash holdings evidence from China's agricultural sector
Xiatong Chu, Meng Tian, Junguo HuaPurpose
This study aims to evaluate the impact of climate transition risk on agricultural firms' cash holdings, and to further explore the underlying mechanisms and economic consequence.
Design/methodology/approach
This study constructs a panel dataset from the annual reports of Chinese agricultural listed firms using textual analysis, and employs a fixed-effects model to explore the relationship between climate transition risk and cash holdings.
Findings
This study demonstrates that climate transition risk significantly reduces the cash holdings of agricultural firms. Corporate investment and financing constraints mediate this effect, while customer concentration moderates it. Firms located in western regions, large-scale firms, those with a high degree of digital transformation, and foreign-invested firms are better able to cushion the impact of climate transition risk on cash holdings. The influence of climate transition risk on cash holdings further leads to a reduction in operating profit margins.
Originality/value
This study makes a significant contribution to revealing the relationship between climate transition risk and cash holdings in agricultural firms.