"At what cost? Environmental regulation and corporate cash holdings"

This paper, published in Finance Research Letters, explores the relation between environmental protection laws and corporate cash holdings. Analyzing data from firms in 31 countries, the authors, Anna Alexander (dSEA Unipd), Antonio De Vito (University of Bologna) and Luca Menicacci (Free University of Bozen-Bolzano), find that such laws decrease cash reserves, likely due to increased operating costs and reduced profits. Additionally, firms with high market power and those in countries with lenient anti-tax avoidance rules experience smaller reductions in cash holdings. In summary, environmental protection laws negatively impact firms' cash balances, shedding light on their economic consequences.

Read the full paper here