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Does the subsidiary's climate risk matter? Evidence from the stock price crash

Author

Listed:
  • Liu, Xiaoyuan
  • Wang, Deli
  • Han, Wenqi
  • Wu, Shangrui

Abstract

Combining satellite climate data with the subsidiaries’ geographical locations of listed firms in China, we document a significant positive relation between subsidiary-level climate risk exposure and future stock price crash risk of conglomerate. The results are stronger for firms with higher CEO performance pressure, higher subsidiary climate risk management costs and weaker external governance. Our findings shed light on the economic consequences of climate risks at the subsidiary level.

Suggested Citation

  • Liu, Xiaoyuan & Wang, Deli & Han, Wenqi & Wu, Shangrui, 2024. "Does the subsidiary's climate risk matter? Evidence from the stock price crash," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004361
    DOI: 10.1016/j.econlet.2024.111952
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    More about this item

    Keywords

    Subsidiary; Climate risk; Stock price crash risk;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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