How Do Adaptation Initiatives Affect Corporate Debt Choice? - Sabri Boubaker, EM Normandie Business School, France & Swansea University

Event Date: 22 January 2025

Speaker: Sabri Boubaker, EM Normandie Business School, France & Swansea University

Venue: Strathclyde Business School, Cathedral Wing, CW406B

Time: 2pm

Abstract:

Climate change adaptation initiatives are designed to navigate climate change. However, it is unclear how firms and creditors perceive regulatory risks and adaptation strategies associated with such initiatives. Employing the staggered introduction of state-level climate change adaptation plans as quasi-exogenous shocks, we find that initiating such plans significantly increases the reliance on private debt financing for affected firms. This effect is more
pronounced among firms prone to suffer from climate risks, with more fragile fundamentals and higher information asymmetries. Our findings shed light on how climate issues determine the perceptions of various types of creditors and affect corporate decisions.

Published: 6 February 2025