How climate risk shapes corporate payout decisions

Borozan D., PİRGAİP B.

Finance Research Letters, vol.99, 2026 (SSCI, Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 99
  • Publication Date: 2026
  • Doi Number: 10.1016/j.frl.2026.109948
  • Journal Name: Finance Research Letters
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, ABI/INFORM
  • Keywords: Climate change exposure, Craggit, Dividends, Exogenous shocks, Share repurchases
  • Hacettepe University Affiliated: Yes

Abstract

This study examines how climate risk influences corporate payout policies, specifically dividends and share repurchases, while accounting for firm characteristics and economic recessions. We employ a double-hurdle model that incorporates correlated random effects and a control function approach, separating the decision to pay from the payout size, with a panel of large, publicly visible U.S. non-financial firms with regular earnings call disclosures over the period 2004 to 2022. The results show that climate risk does not affect the likelihood of paying dividends or initiating repurchases but significantly reduces the intensity of repurchases once the decision to pay is made. Dividends, on the other hand, remain anchored by long-term commitments. These findings hold practical relevance for regulators and market participants.