Climate policy uncertainty and corporate dividends

This paper investigates whether climate policy uncertainty (CPU) matters to a firm's dividend policy. Using Gavriilidis's (2021) novel measure of uncertainty related to climate policy and a large sample of US publicly traded firms over the period 1987-2022, we found a positive association between CPU and dividend payouts. This association is stronger for firms with talented managers and less pronounced for firms in climate sensitive industries and headquartered in US States with more stringent environmental regulations. These results contribute to the nascent literature on the implications of uncertainty related to climate policy to corporate financial decisions.