Attention to Global Warming
Review of Financial Studies, Forthcoming
50 Pages Posted: 30 May 2018 Last revised: 28 Jul 2019
Date Written: July 23, 2019
We find that people revise their beliefs about climate change upward when experiencing warmer than usual temperatures in their area. Using international data, we show that attention to climate change, as proxied by Google search volume, increases when the local temperature is abnormally high. In financial markets, stocks of carbon-intensive firms underperform firms with low carbon emissions in abnormally warm weather. Retail investors (not institutional investors) sell carbon-intensive firms in such weather, and return patterns are unlikely to be driven by changes in fundamentals. Our study sheds light on peoples' collective beliefs and actions about global warming.
Keywords: Climate Change, Investor Attention, Belief Update, Retail Investors
JEL Classification: D83, G12, G14, G15, Q54
Suggested Citation: Suggested Citation