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Journal of Financial and Quantitative Analysis Vol. 61 No. 3 2026

Nowcasting Firms’ Operating Activities from Satellite Data on Thermal Infrared Radiation

Yuan Xue1; Bohui Zhang2; Xiaofeng Zhao3

1 Henan University Advanced Institute of Finance · 2 The Chinese University of Hong Kong (Shenzhen) School of Management and Economics, and Shenzhen Institute of Data Economy · 3 Lingnan University The Faculty of Business

Abstract

Practical real-world activities consume energy and emit thermal infrared radiation (TIR). Leveraging this physical fact, we develop a direct, real-time measure of firms’ operating activity using satellite data. Tracking 28,236 factories of Chinese listed firms, we find TIR declines significantly following operational shocks and strongly forecasts subsequent sales growth, costs, investment, employment, and profits. TIR also predicts future stock returns, especially among opaque firms and those with limited investor access, yet sophisticated investors largely ignore this information. Our findings highlight TIR as a distinctive, under-exploited indicator of corporate fundamentals.

DOI
10.1017/s0022109025102147
Volume
61
Issue
3
Pages
1073-1111
Language
en
Sources
openalex crossref

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