Theme: Sustainable Energy Transition and the Value of Asset Liquidity

Speaker: Professor Ning Gao, Alliance Manchester Business School

Host: Associate Professor Chen Hua, School of Accounting, Southwestern University of Finance and Economics

Time: 10:30 -12:00 a.m. , April 8, 2025, Tuesday

Place: Room 650, Chengzheng Building, Liulin Campus

Sponsor: Major Foundation Theory and Practical Innovation Research Team in the Digital Economy, Research Team on Theoretical Innovation and Methodological Systems for Finance and Accounting with Chinese Characteristics in the New Era, School of Accounting, Research Office

Introduction of the speaker:

Professor Ning Gao is the Chair Professor of Finance at the Alliance Manchester Business School, University of Manchester, UK, and serves as the Deputy Director of the Centre for the Analysis of Investment Risk (CAIR). His research focuses on corporate finance, sustainable finance, ESG risk, mergers and acquisitions, information in financial systems, and corporate governance. His work has been frequently published in top-tier international journals such as Management Science, Journal of Financial and Quantitative Analysis, and Journal of Corporate Finance. He is a member of the UK Economic and Social Research Council (ESRC) Evaluation Committee, an editor of the Journal of Sustainable Finance and Accounting, and an advisor to the Manchester China Institute. He is also the founder and organizer of the UK Annual Corporate Finance Conference. Professor Gao holds a Ph.D. from the Hong Kong University of Science and Technology and a Bachelor’s degree from Renmin University of China.

Abstract:

The use of renewable energy to replace fossil fuels is at the core of transitioning to a greener economy, where as how such a transition impacts the corporate sector is unclear. We employ the Renewable Portfolio Standards’ adoption in the United States as an exogenous shock to companies’ energy costs and tackle the above question through the lens of the value of corporate cash holdings. We find RPS’ adoption significantly increases companies’ value of cash and such an effect is stronger for firms with greater financial constraints, weaker market power, lower internal capital mobility, higher growth opportunities, higher electricity intensity, or facing more stringent RPS compliance requirements. Cash holdings also increase significantly after the RPS’ adoption. Our study demonstrates the precautionary motive plays a more significant role for companies’ asset liquidity management under renewable energy policies.