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Climate Adaptation Risk and Capital Structure: Evidence From State Climate Adaptation Plans

Tunde Kovacs et al.

Financial Management2025https://doi.org/10.1111/fima.12493article
AJG 3ABDC A*
Weight
0.57

Abstract

Taking the staggered implementation of state climate adaptation plans (SCAPs) as a quasi‐natural experiment, we find that firms headquartered in states that finalize SCAPs increase their financial leverage significantly more in the postadoption period relative to firms located in states without SCAPs. This result is driven by firms facing greater physical climate risk and by firms with more sensitivity to climate policy uncertainty. Further, we show that the leverage increase is value‐enhancing and that SCAPs reduce corporate business risk. The results highlight the net benefits of state climate action and the role of local governments in the interplay between business risk and firm decision, with implications both for the business world and policymakers.

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https://doi.org/https://doi.org/10.1111/fima.12493

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@article{tunde2025,
  title        = {{Climate Adaptation Risk and Capital Structure: Evidence From State Climate Adaptation Plans}},
  author       = {Tunde Kovacs et al.},
  journal      = {Financial Management},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/fima.12493},
}

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Climate Adaptation Risk and Capital Structure: Evidence From State Climate Adaptation Plans

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Evidence weight

0.57

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.57 × 0.4 = 0.23
M · momentum0.78 × 0.15 = 0.12
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.