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Tuning into Climate Risks: Extracting Innovation from Television News for Clean Energy Firms

Author

Listed:
  • Wasim Ahmad
  • Mohammad Arshad Rahman
  • Suruchi Shrimali
  • Preeti Roy

Abstract

This article develops multiple novel climate risk measures (or variables) based on the television news coverage by Bloomberg, CNBC, and Fox Business, and examines how they affect the systematic and idiosyncratic risks of clean energy firms in the United States. The measures are built on climate related keywords and cover the volume of coverage, type of coverage (climate crisis, renewable energy, and government & human initiatives), and media sentiments. We show that an increase in the aggregate measure of climate risk, as indicated by coverage volume, reduces idiosyncratic risk while increasing systematic risk. When climate risk is segregated, we find that systematic risk is positively affected by the physical risk of climate crises and transition risk from government & human initiatives, but no such impact is evident for idiosyncratic risk. Additionally, we observe an asymmetry in risk behavior: negative sentiments tend to increase idiosyncratic risk and decrease systematic risk, while positive sentiments have no significant impact. These findings remain robust to including print media and climate policy uncertainty variables, though some deviations are noted during the COVID-19 period.

Suggested Citation

  • Wasim Ahmad & Mohammad Arshad Rahman & Suruchi Shrimali & Preeti Roy, 2024. "Tuning into Climate Risks: Extracting Innovation from Television News for Clean Energy Firms," Papers 2409.08701, arXiv.org, revised Sep 2024.
    • Handle: RePEc:arx:papers:2409.08701
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    References listed on IDEAS

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