Review of Corporate Finance > Vol 4 > Issue 1–2

Does Climate Change Exposure Matter to Stakeholders? Evidence from the Costs of High Leverage

Sadok El Ghoul, Campus Saint-Jean, University of Alberta, Canada, , Omrane Guedhami, Moore School of Business, University of South Carolina, USA, , Huan Kuang, College of Business, Bryant University, USA, , Ying Zheng, College of Business, Bryant University, USA,
Suggested Citation
Sadok El Ghoul, Omrane Guedhami, Huan Kuang and Ying Zheng (2024), "Does Climate Change Exposure Matter to Stakeholders? Evidence from the Costs of High Leverage", Review of Corporate Finance: Vol. 4: No. 1–2, pp 47-87.

Publication Date: 18 Apr 2024
© 2024 S. El Ghoul, O. Guedhami, H. Kuang and Y. Zheng
Corporate finance,  Climate change
JEL Codes: Q54, G32, G33
Climate exposurecapital structureproduct market performancestakeholders


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In this article:
Hypothesis Development 
Sample, Methodology, and Summary Statistics 
Empirical Results 
Channels of Influence: Stakeholder Responses 
Robustness Tests 


This work adds to climate finance research by studying stakeholder reactions to climate change exposure in the context of capital structure and product market interactions. We use a sample of 2,547 U.S. firms from 2004 to 2020, and find that climate change exposure intensifies stakeholder-driven costs of high leverage. The impact is stronger for firms headquartered in Democratic-leaning states, after the–Paris Agreement, in industries with more physical exposure, and among firms with more sensitive stakeholder responses. Overall, our results suggest that highly leveraged firms are vulnerable to climate change shocks and undergo stricter scrutiny from their stakeholders. Our study has several implications for climate finance research.



Review of Corporate Finance, Volume 4, Issue 1–2 Special Issue on Sustainable and Climate Finance: Articles Overiew
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