 Do managers hedge disaster risk? Extreme earthquake shock and firm innovationsYonghui Rao, Zijiang Hu and Susan Sunila Sharma Pacific-Basin Finance Journal, 2021, vol. 70, issue C Abstract: In this paper, we investigate how extreme earthquake events affect energy firms' innovations to hedge disaster risk. On May 12, 2008, a magnitude-8 earthquake hit Sichuan province. It was the most damaging earthquake since the foundation of the People's Republic of China. Using the Great Wenchuan earthquake as a shock, we find the following: 1) the extreme disaster shock spurs innovations of firms with similar strong earthquake experiences. 2) The effect is pronounced for shock-proximate firms, firms with a negative previous experience, and firms with financial constraint. 3) We also find that labor protections and political pressure also drive firms to improve innovation activities after the extreme event. Overall, this study sheds light on determinants of energy firms' innovations from the perspective of extreme natural disasters. Keywords: Extreme disaster event; Firm innovations; Salience effects; Labor protection; Political pressure (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:70:y:2021:i:c:s0927538x21001803 DOI: 10.1016/j.pacfin.2021.101673 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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