This study investigates the impact of regional carbon efficiency on corporate cash holdings in China using data from 2008 to 2019. The findings indicate that improved regional carbon efficiency reduces corporate cash holdings. This is attributed to a decrease in carbon risk, leading to more stable cash flows, alleviated financing constraints, and increased access to external funds. Furthermore, the study finds that regional carbon efficiency improves debt financing capabilities and encourages long-term investments, further contributing to lower cash holdings. The research contributes to the literature on corporate cash holdings and the economic consequences of climate change.

Xiaohui Chen, Wen Chen, Tao Hu, Bo Yang, Jianguang Zeng