Acute vs Chronic Physical Climate Risk and Firm Value
This paper investigates the effects of physical climate risk on firm valuation, introducing the distinction between acute and chronic physical risks. Since acute risks are more salient compared to chronic risks, we expect them to be more priced by investors. Drawing on an international dataset of 1,...
Saved in:
| In: | URI:https://journals.openedition.org/fcs, |
|---|---|
| Main Authors: | , , |
| Format: | Article ou chapitre numérique |
| Language: | Anglais |
| Published: |
Finance Contrôle Stratégie
2025
|
| Subjects: | |
| Online Access: | Accès Université d'Orléans et IFPM Accès Université d'Orléans et IFPM |
| Summary: | This paper investigates the effects of physical climate risk on firm valuation, introducing the distinction between acute and chronic physical risks. Since acute risks are more salient compared to chronic risks, we expect them to be more priced by investors. Drawing on an international dataset of 1,293 firms during the 2009-2020 period, we find that acute risk has a negative and significant direct association with firm value, while the effect of chronic risk is not significant on the 2050 horizon. Compared to chronic risk, the acute risk is shown to indirectly significantly impact more firm value by reducing sales growth and dividends. |
|---|