Extreme climate and corporate financialization: Evidence from China

This paper aims to explore the relationship between extreme climate and corporate financialization. We use Chinese A -share listed companies from 2008 to 2020 as a sample, and combine them with the extreme climate data of the cities in which the firms are located. The findings reveal that extreme precipitation significantly enhances corporate financialization, whereas extreme high and low temperatures do not have a significant effect. The results withstand a series of robustness tests, including alternative measures and PSM methods. The mechanism test results demonstrate that loose financing constraints and healthy cash flow can strengthen the impact of extreme climate on corporate financialization. The positive impact of extreme climate on corporate financialization is more pronounced for nonstate-owned enterprises, small enterprises, and firms in eastern and large cities.