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

54 Pages Posted: 30 Nov 2020

See all articles by John (Jianqiu) Bai

John (Jianqiu) Bai

Northeastern University - D'Amore-McKim School of Business

Yongqiang Chu

Belk College of Business, UNC Charlotte

Chen Shen

University of North Carolina (UNC) at Charlotte - Department of Finance

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance

Date Written: November 30, 2020

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. Post-merger, analyst forecasts become more accurate and environmental-related ESG score improves.

Keywords: Climate Change; Sea Level Rise; Mergers and Acquisitions

JEL Classification: A14, G41, K42

Suggested Citation

Bai, John (Jianqiu) and Chu, Yongqiang and Shen, Chen and Wan, Chi, Managing Climate Change Risks: Sea Level Rise and Mergers and Acquisitions (November 30, 2020). Available at SSRN: https://ssrn.com/abstract=3739599 or http://dx.doi.org/10.2139/ssrn.3739599

John (Jianqiu) Bai (Contact Author)

Northeastern University - D'Amore-McKim School of Business ( email )

220 B RP
Boston, MA 02115
United States

Yongqiang Chu

Belk College of Business, UNC Charlotte ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States
7046877695 (Phone)

Chen Shen

University of North Carolina (UNC) at Charlotte - Department of Finance ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance ( email )

Boston, MA 02125
United States

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