Managing Climate Change Risks: Sea Level Rise and Mergers and Acquisitions
58 Pages Posted: 30 Nov 2020 Last revised: 11 May 2021
Date Written: May 11, 2021
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 as well as overall ESG scores improve.
Keywords: Climate Change; Sea Level Rise; Mergers and Acquisitions
JEL Classification: A14, G41, K42
Suggested Citation: Suggested Citation