Cash-rich Firms and Carbon Emissions

Journal article


Alam, M., Safiullah, M. and Islam, M. 2022. Cash-rich Firms and Carbon Emissions. International Review of Financial Analysis. 81, pp. 1-14. https://doi.org/10.1016/j.irfa.2022.102106
AuthorsAlam, M., Safiullah, M. and Islam, M.
Abstract

We investigate whether corporate cash holdings affect carbon dioxide emissions. Using a sample of 5,402 firm-years observations from 943 U.S. firms during 2007–2017, we find that carbon emissions are lower in firms with higher corporate cash holdings. The effect of cash holdings on carbon emissions is more pronounced in firms with low leverage and less financial constraints. Our channel analysis further unveils that renewable energy consumption and carbon abatement investment are higher in cash-rich firms, which transmit lower carbon emissions. Our findings are robust to different identification strategies and alternative measures of cash holdings and carbon emissions. Overall, our paper provides novel evidence on the role of corporate cash holdings in mitigating carbon emissions.

KeywordsCash holdings; Carbon emissions; Renewable energy consumption; Carbon abatement investment
Year2022
JournalInternational Review of Financial Analysis
Journal citation81, pp. 1-14
PublisherElsevier
ISSN1873-8079
Digital Object Identifier (DOI)https://doi.org/10.1016/j.irfa.2022.102106
Web address (URL)https://www.sciencedirect.com/science/article/pii/S105752192200076X
Accepted author manuscript
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Open
Publisher's version
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File Access Level
Open
Output statusPublished
Publication dates
Online09 Mar 2022
Publication process dates
Accepted04 Mar 2022
Deposited11 Dec 2023
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