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Impact of climate on firm value: Evidence from the electric power industry in Brazil

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  • Lucas, Edimilson Costa
  • Mendes-Da-Silva, Wesley

Abstract

The finance literature has documented efforts to assess the economic impacts of climate on the global economy. However, the literature regarding empirical evidence from the energy sector is limited, particularly at the firm level. Therefore, this study assesses the impact of climate variables, i.e., temperature, rainfall, and localization, on the value of energy distribution companies. We used a unique dataset from a representative emerging market where hydropower plants are the most relevant source of energy. Based on static and spatial panel data analysis, the findings suggest that temperature and rainfall have a significant effect on the value of these companies. These results highlight the need for investments to ensure the resilience of the infrastructure of the energy sector and the operational efficiency of these companies against possible risks posed by climate variables.

Suggested Citation

  • Lucas, Edimilson Costa & Mendes-Da-Silva, Wesley, 2018. "Impact of climate on firm value: Evidence from the electric power industry in Brazil," Energy, Elsevier, vol. 153(C), pages 359-368.
    • Handle: RePEc:eee:energy:v:153:y:2018:i:c:p:359-368
    DOI: 10.1016/j.energy.2018.04.024
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    2. Liu, Tiansen & Song, Yazhi & Xing, Xinpeng & Zhu, Yue & Qu, Zhengyu, 2021. "Bridging production factors allocation and environmental performance of China’s heavy-polluting energy firms: The moderation effect of financing and internationalization," Energy, Elsevier, vol. 222(C).
    3. Ma, Guangcheng & Cao, Jianhua & Famanta, Mahamane, 2023. "Does the coordinated development of two-way FDI increase the green energy efficiency of Chinese cities? Evidence from Chinese listed companies," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 59-77.
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    5. Venturini, Alessio, 2022. "Climate change, risk factors and stock returns: A review of the literature," International Review of Financial Analysis, Elsevier, vol. 79(C).

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