Abnormal temperature and retail investors’ trading behavior

Huajin Liu, Wei Zhang, Xiaotao Zhang and Donghui Li

Finance Research Letters, 2023, vol. 55, issue PB

Abstract: Growing attention is being directed toward the influence of climate risks on financial markets. This paper reveals that individual investors in the Chinese stock market have integrated climate risk into their investment decisions. Abnormally high temperatures stimulate individual investors' belief in global warming, which in turn affect their stock selection preferences. During periods of abnormally high local temperatures, we observe a shift in individual investors' assets from high-emission companies to low-emission companies. This behavior is driven by both firm valuations and ethical considerations, with evidence of synchronization between stock prices and investor actions.

Keywords: Global warming; Abnormal temperature; Account data; Asset allocation decision (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003161

DOI: 10.1016/j.frl.2023.103944

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