Abstract: Climate risk has become one of the major risks affecting the sustainable development of enterprises, and enhancing the risk-resistant capacity of enterprises is an important strategy to ensure their sound operation and promote resilient economic growth. Existing studies have mostly focused on the impact of climate risk on macroeconomics and supply chain, and few have explored the micro-level mechanism of corporate financial activities. Taking A-share listed companies from 2007 to 2022 as the research sample, we empirically examined the impact of climate risk on the degree of corporate real earnings management and the mechanism of its role. The study finds that (1) climate risk significantly reduces the degree of corporate real earnings management, and this conclusion still holds after a series of robustness tests. (2) Mechanism analysis shows that climate risk can inhibit the degree of corporate real earnings management by increasing corporate financing constraints; media attention can strengthen the inhibitory effect of climate risk on the degree of corporate real earnings management. (3) Heterogeneity analysis reveals that transition risk has a more pronounced inhibitory effect on the degree of corporate real earnings management compared to severe risk and chronic risk; climate risk has a more pronounced inhibitory effect on the degree of corporate real earnings management that are more marketized and in the growth period. The findings reveal the intrinsic link between climate risk and corporate real earnings management, provide new empirical evidence on how to curb corporate real earnings management, and emphasize the importance of strengthening external monitoring to improve corporate governance.

Key words: climate risk, the degree of corporate real earnings management, financing constraints, moderating effect