Attention to Global Warming

Review of Financial Studies, Forthcoming

50 Pages Posted: 30 May 2018 Last revised: 28 Jul 2019

See all articles by Darwin Choi

Darwin Choi

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Zhenyu Gao

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Wenxi Jiang

CUHK Business School, The Chinese University of Hong Kong

Date Written: July 23, 2019

Abstract

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

Choi, Darwin and Gao, Zhenyu and Jiang, Wenxi, Attention to Global Warming (July 23, 2019). Review of Financial Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3180045 or http://dx.doi.org/10.2139/ssrn.3180045

Darwin Choi (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Zhenyu Gao

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong
(852)39431824 (Phone)

HOME PAGE: http://sites.google.com/site/gao515515/

Wenxi Jiang

CUHK Business School, The Chinese University of Hong Kong ( email )

Room 1250, Cheng Yu Tung Building
Chinese University of Hong Kong
Shatin, NT 06520
Hong Kong

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