IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v96y2024ipbs1057521924005891.html
   My bibliography  Save this article

Climate transition risk, environmental news coverage, and stock price crash risk

Author

Listed:
  • Gan, Kai
  • Li, Rongnan
  • Zhou, Qi

Abstract

Sudden shifts in climate policy, technological innovation, and market preference can negatively impact a firm's asset value, leading to potential climate transition risk. While numerous studies have examined the economic implications of climate transition risk, few have explored its impact on stock price crash risk. This study addresses this gap by introducing a novel quantitative method for assessing climate transition risk and analyzing its effect on stock price crash risk. Our findings indicate a significantly positive relationship between climate transition risk and stock price crash risk. This relationship can be mitigated by environmental news coverage. It is also found that the positive impact of climate transition risk on stock price crash risk is mainly realized through the paths of managers' hoarding of bad news and investors' divergence of opinion. The heterogeneity analysis further suggests that the positive effect of climate transition risk on stock price crash risk is weaker for firms with higher ESG performance, whereas this effect is more pronounced for firms with greater exposure to natural disasters and those operating in regions with stringent environmental regulation. Overall, our study provides novel empirical evidence on the relationship between climate risk and financial stability.

Suggested Citation

  • Gan, Kai & Li, Rongnan & Zhou, Qi, 2024. "Climate transition risk, environmental news coverage, and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    • Handle: RePEc:eee:finana:v:96:y:2024:i:pb:s1057521924005891
    DOI: 10.1016/j.irfa.2024.103657
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521924005891
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irfa.2024.103657?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:96:y:2024:i:pb:s1057521924005891. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.