| dc.description.abstract | There is little empirical evidence of the effect of climate policy uncertainty
(CPU) on corporate policies. Using data from 52,389 firm-year observations of 4,025
unique firms listed on the Tokyo Stock Exchange (TSX) from 1990 to 2022, I find a
positive relationship between CPU and the large-scale stock price decline, implying
that an increase in CPU exacerbates the firm-level crash risk. Further analysis shows
that the relationship between CPU and stock price crash risk is more pronounced for
firms with high information asymmetry, financial constraints, or bank loans. Taken
together, this study enriches the literature on policy uncertainty indicators and crash
risk determinants. In addition, the findings help market participants in risk management
and investment decisions by comprehending crash risk mechanisms and policy
uncertainty | en_US |
