Acute vs Chronic Physical Climate Risk and Firm Value

Risques climatiques physiques aigus ou chroniques et valeur des entreprises

Nicolas Baelen (), Sylvain Marsat () and Guillaume Pijourlet ()
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Nicolas Baelen: IAE Dijon - Institut d'Administration des Entreprises (IAE) - Dijon - UB - Université de Bourgogne, CREGO - Centre de Recherche en Gestion des Organisations - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UB - Université de Bourgogne - UBFC - Université Bourgogne Franche-Comté [COMUE] - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]
Sylvain Marsat: CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne, UCA - Université Clermont Auvergne
Guillaume Pijourlet: CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne

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Abstract: 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.

Keywords: Climate Risk; Physical Risk; Acute Risk; Chronic Risk; Firm Value (search for similar items in EconPapers)
Date: 2024-12-31
Note: View the original document on HAL open archive server: https://hal.science/hal-05157466v1
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Published in Finance Contrôle Stratégie, 2024, 27 (4), ⟨10.4000/14bd3⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05157466

DOI: 10.4000/14bd3

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