Climate change news risk and advertising spending
研究发现气候变化新闻风险会降低企业广告支出，主要原因是财务约束，且对流动性差、现金流波动大的企业影响更强。
• Climate risk lowers corporate advertising spending. • Financial constraints primarily drive the effect. • International operations influence the result. • Prior constrained corporate liquidity condition influences the effect. We examine the effect of climate change news risk on corporate advertising spending. Using a novel measure of media-driven climate risk matched to firm-level advertising data, we find a robust negative relationship between climate news risk and advertising spending. Mechanism tests show that financial constraints mediate this relationship. The effect is stronger for firms with low stock market liquidity and high cash-flow volatility. We also find that domestic firms reduce their advertising spending relative to their multinational counterparts, which aligns with the idea that international operations provide diversification and stronger cash flow benefits that enhance firms’ resilience to the effects of domestic climate risk shocks. The results remain consistent across different advertising measures, and after correcting for selection bias with a Heckman two-step method. We address endogeneity concerns through instrumental variable estimation. Our findings support the risk management hypothesis that firms proactively adjust their financial policies to mitigate the negative effects of rising climate risk exposure.