Natural Disasters, Technology Diversity, and Operating Performance

70 Pages Posted: 12 May 2017 Last revised: 9 May 2018

See all articles by Po-Hsuan Hsu

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Hsiao-Hui Lee

National Chengchi University (NCCU) - Department of Management Information Systems

Shu-Cing Peng

National Central University - Department of Finance

Long Yi

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences

Date Written: September 18, 2017

Abstract

In this paper, we empirically measure the impact of natural disasters on firm-level operating performance and examine if such impact can be mitigated by technology diversification. Using major natural disasters specified by Barrot and Sauvagnat (2015) and factory location data from the toxic release inventory (TRI) database, we first find that firms with factories located in states affected by natural disasters perform significantly worse with respect to profitability. Secondly, we find that firms with diversified technologies are significantly less subject to the impact of natural disasters, suggesting that technology diversity enhances firms’ sustainability.

Keywords: natural disasters; innovation; operating performance

Suggested Citation

Hsu, Po-Hsuan and Lee, Hsiao-Hui and Peng, Shucing and Yi, Long, Natural Disasters, Technology Diversity, and Operating Performance (September 18, 2017). Review of Economics and Statistics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2966749 or http://dx.doi.org/10.2139/ssrn.2966749

Po-Hsuan Hsu (Contact Author)

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

Hsiao-Hui Lee

National Chengchi University (NCCU) - Department of Management Information Systems ( email )

No. 64, Section 2, Zhǐnán Rd
Wenshan District
Taipei City
Taiwan

Shucing Peng

National Central University - Department of Finance ( email )

No. 300, Jung-da Rd.
Jung-Li
Taoyuan
Taiwan

Long Yi

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences ( email )

Hong Kong

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