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

58 Pages Posted: 30 Nov 2020 Last revised: 11 May 2021

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

Ontario Tech University

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance

Date Written: May 11, 2021

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 as well as overall ESG scores improve.

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 (May 11, 2021). 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 )

360 Huntington Ave.
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

Ontario Tech University ( email )

2000 Simcoe St N
Oshawa, Ontario L1G0C5
Canada

Chi Wan

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

Boston, MA 02125
United States

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