Extreme Heat Impacts Firms’ Stock Value
First study to quantify the impact of physical climate risk on corporate market values
Climate change is making business and investors sweat.
Research from the University of California, Davis, finds episodes of extremely hot weather lead to declines in market value. This is especially true in the South and Southeast, and for small firms — which lost an average of more than $17 million in the month following the hot weather.
“These findings of a negative market response imply that the equity market recognizes but underprices weather-related climate risk." —Paul Griffin, UC Davis Graduate School of Management accounting professor