Managing Climate Change Risks: Sea-Level Rise and Mergers and Acquisitions

John Jianqiu Bai (), Yongqiang Chu (), Chen Shen and Chi Wan
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John Jianqiu Bai: D’Amore-McKim School of Business at Northeastern University, Boston, MA 02115, USA
Yongqiang Chu: Belk College of Business, University of North Carolina Charlotte, 9201 University City Blvd., Charlotte, NC 28223, USA
Chen Shen: Ontario Tech University, 2000 Simcoe Street North, Oshawa, Ontario L1G 0C5, Canada

Quarterly Journal of Finance (QJF), 2024, vol. 14, issue 01, 1-47

Abstract: Using a large sample over the period 1986 to 2017, we show that companies with higher exposure to climate change risk induced by sea-level rise (SLR) tend to acquire firms that are unlikely to be directly affected by SLR. We find that acquirers with higher SLR exposure experience significantly higher announcement-period abnormal stock returns. Analyses using failed merger bids as an exogenous shock show that post-merger, analyst forecasts become more accurate and environmental-related as well as overall ESG scores improve.

Keywords: Climate change; sea level rise; mergers and acquisitions (search for similar items in EconPapers)
JEL-codes: A14 G41 K42 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S201013922450006X

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