Climate risk and deployment of corporate resources to working capital
2023, Economics Letters, 224, pp.111002
Résumé
Using a large sample of US listed firms, we find that exposure to climate risk is negatively associated with working capital. This effect is accentuated in carbon-intensive industries and firms facing financial difficulties. These findings suggest that climate risk pressures firms to release unnecessary resources allocated to working capital, a result consistent with the disciplinary channel.