Climate change exposure and the use of short-term debt

This study investigates the relationship between a firm's exposure to climate change and its preference for short-term debt. Using a comprehensive dataset of U.S. firms from 2002 to 2020 and employing a novel measure of firm-specific climate change exposure, the findings indicate that firms with high exposure are more likely to use short-term debt, particularly for opportunity-related climate change exposure. Propensity score matching and additional robustness analyses support the robustness of our findings. In addition, cross-sectional subsample analyses further suggest that the effect is magnified in climate-sensitive groups and financially constrained firms.