RESEARCH ARTICLE
Carbon emissions and abnormal cash holdings
Abu Amin,
Ashrafee T. Hossain,
Abdullah-Al Masum,
Corresponding Author
Abu Amin
Central Michigan University, Mount Pleasant, Michigan, USA
Correspondence
Abu Amin, Central Michigan University, Mount Pleasant, MI 48859, USA.
Email: [email protected]
Search for more papers by this authorAshrafee T. Hossain
Memorial University of Newfoundland, St. Johns, Newfoundland and Labrador, Canada
Search for more papers by this authorAbdullah-Al Masum
Johnson C. Smith University, Charlotte, North Carolina, USA
Search for more papers by this authorAbu Amin,
Ashrafee T. Hossain,
Abdullah-Al Masum,
Corresponding Author
Abu Amin
Central Michigan University, Mount Pleasant, Michigan, USA
Correspondence
Abu Amin, Central Michigan University, Mount Pleasant, MI 48859, USA.
Email: [email protected]
Search for more papers by this authorAshrafee T. Hossain
Memorial University of Newfoundland, St. Johns, Newfoundland and Labrador, Canada
Search for more papers by this authorAbdullah-Al Masum
Johnson C. Smith University, Charlotte, North Carolina, USA
Search for more papers by this authorEach author has contributed equally in this project.
Abstract
We find that companies that emit high levels of carbon tend to have lower abnormal cash holdings. We have run a battery of endogeneity tests to ensure the robustness of our findings. Our further analysis revealed that weaker internal governance, higher information asymmetry and CEO overconfidence contribute to the heterogeneity of the results. Additionally, we notice that polluting firms prefer to spend more on capital investments while allocating less toward dividends and R&D activities. Our results are consistent with agency theory, indicating that managerial preference for suboptimal investment and/or avoidance of external disciplining might contribute to lower abnormal cash holdings.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from the corresponding author upon reasonable request.
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