Climate Change, Firm Performance, and Investor Surprises

By Nora Pankratz, Rob Bauer, Jeroen Derwall. Social Science Research Network, 2019

399 citations recorded by the source corpus.

In this study, we link records of fir rm performance, forecasts of analysts, and the returns after earnings announcements to fi rm-specifi c measures of heat exposure for 4,400 fi rms in 57 countries from 1995 to 2017. We fi nd that increasing exposure to extremely high temperatures reduces revenues and operating income. Moreover, the deviation in analyst estimates from actual fi nancial performance and the earnings announcement returns become more negative when fi rms' heat exposure increases. These fi ndings indicate that investors do not anticipate the economic repercussions of heat as a fi rst-order physical climate risk.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/d6e25e70cd10b596c55399a446076971cba693cc

Citations in the corpus

• Climate Change and Adaptation in Global Supply-Chain Networks (2019, neutral): “Previous research in the finance literature has studied the direct effects of climate shocks on firm profitability (Zhang et al., 2018; Addoum et al., 2019; Pankratz, 2019), housing prices”
• The impact of climate change on the cost of bank loans (2020, neutral): “2019), but also are associated with declining revenues and operating income (Pankratz et al. 2019).”