Carbon abatement pressure and corporate cash holdings: Evidence from China

Abstract

This study investigates whether and how the perception of carbon abatement pressure affects corporate financing behavior. The results show that carbon abatement pressure increases corporate cash holdings via the channel of financing constraints, and this positive relationship still holds after a series of robustness tests. This positive relationship is pronounced for private firms, those with higher operational risks, and firms in regions with lower levels of marketization.

Keywords

• Carbon abatement pressure
• Cash holdings
• Institutional pressure