Work

Emissions trading scheme participation and firms’ cash holdings

Year: 2023

Type: article

Abstract: This study investigates the effect of participating in an emissions trading scheme (ETS) on firms' future cash holdings. Using global firm-level data from different continents, our findings show that, notwithstanding the benefits of ETS, its membership has a significant impact on firms' cash holding. Additionally, we document that bankruptcy risk, firm growth potential, corporation tax, and financial constraints mitigate the impact of ETS on corporate cash holdings. Furthermore, we find that the country of operations, continent, and legal origin of the domiciled firm influence the association between ETS and firm cash holdings level. The results are robust to difference in differences (DiD) estimation and a variety of econometric specifications.

Source: Finance research letters

DOI: 10.1016/j.frl.2023.104565

Authors: Rilwan Sakariyahu, Rodiat Lawal, Nana Abena Kwansa, Ammar Ahmed, Gbenga Adamolekun

Institutions: Edinburgh Napier University, University of Dundee, Heriot-Watt University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,930

OpenAlex ID: W4387456989

FWCI: 9.303

Cites: 30

Cited by: 16

Related to: 10