The effect of firm-level climate change risk on tax avoidance: evidence from China

Using data from Chinese listed companies, this research investigates the effect of firm-level climate change risk (CCR) on corporate tax avoidance. Our findings suggest that companies exposed to higher CCR are more likely to engage in tax avoidance due to mounting financing constraints. Heterogeneity analyses show that the effect of CCR is more apparent for firms in highly competitive industries and firms without political connections. This paper extends existing studies on the economic consequences of firm-level CCR and highlights the role of CCR-induced financing constraints on corporate tax avoidance.