Ecology

Biology

Cash conversion cycle

Cash

Economics

Computer science

Business

Greenhouse gas

Politics

Political science

Monetary economics

Leverage (statistics)

Cash flow

Operating cash flow

Finance

Natural resource economics

Investment (military)

Machine learning

International Review of Financial Analysis

We investigate whether corporate cash holdings affect carbon dioxide emissions. Using a sample of 5402 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.

Cash-rich firms and carbon emissions