Review of Financial Studies Vol. 37 No. 6 2024

Corporate Climate Risk: Measurements and Responses

Qing Li¹; Hongyu Shan²; Yuehua Tang¹; Vincent Yao³

¹ Warrington College of Business, University of Florida , United States · ² China Europe International Business School, China and Fordham University , United States · ³ J. Mack Robinson College of Business, Georgia State University , United States

Abstract

This paper conducts a textual analysis of earnings call transcripts to quantify climate risk exposure at the firm level. We construct dictionaries that measure physical and transition climate risks separately and identify firms that proactively respond to climate risks. Our validation analysis shows that our measures capture firm-level variations in respective climate risk exposure. Firms facing high transition risk, especially those that do not proactively respond, have been valued at a discount in recent years as aggregate investor attention to climate-related issues has been increasing. We document differences in how firms respond through investment, green innovation, and employment when facing high climate risk exposure.

DOI

10.1093/rfs/hhad094

Volume

37

Issue

6

Pages

1778-1830

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓