Standing Up or Standing By: Abnormally Hot Temperatures and Corporate Environmental Engagement

Jiaxin Wang (), Jingyi Zhuang (), Chao Yan () and Kam C. Chan ()
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Jiaxin Wang: The University of Hong Kong
Jingyi Zhuang: Zhongnan University of Economics and Law
Chao Yan: Zhongnan University of Economics and Law
Kam C. Chan: Research Center of Finance

Journal of Business Ethics, 2025, vol. 196, issue 1, No 6, 93-127

Abstract: Abstract This study investigates how abnormally hot temperatures affect firms’ environmental behaviors in China. We find that firms exposed to abnormally hot temperatures participate in more environmental engagement. We also find that this improvement effect is driven mainly by environmental concerns, including public concerns, CEOs, and governments. Our results remain intact after an array of robustness tests. Further analysis shows that the effect of abnormally hot temperatures on corporate environmental engagement is more pronounced in SOEs, heavily polluting firms, and firms located closer to local environmental protection agencies. Based on the political pressure channel, our results indicate that the improvement effect is more prominent in politically connected firms, cities where local officials can wield more influence, local governments have larger financial slack, and local governments disclose their environmental targets. Moreover, the positive impact of environmental engagement on firm value is stronger when firms are exposed to abnormally hot temperatures. Overall, this study sheds light on the potential stimulation of firms’ environmental actions by global warming, which is yet to be fully understood.

Keywords: Abnormally hot temperature; Climate change; Corporate environmental engagement; Environmental supervision (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10551-024-05682-3

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