Follow the Money: Are Severe Weather Events Value Relevant?

Follow the Money: Are Severe Weather Events Value Relevant? | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article Follow the Money: Are Severe Weather Events Value Relevant? Lisa Liu, Sonakshi Agrawal, Shivaram Rajgopal This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-5449870/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted You are reading this latest preprint version Abstract An important contemporary policy debate relates to whether climate risk significantly impacts a firm’s financial performance. Our examination of this debate leads to three key findings. First, a severe weather event knocks off 1.3% of an affected public firm’s market capitalization. Second, specific industries and certain time periods drive statistically significant stock price reactions. Moreover, firms that disclose climate risks tend to experience slightly smaller stock price reactions. Third, private companies are particularly susceptible to the negative financial impact of natural disasters. However, private firms exhibit greater resilience when they receive financial assistance from government programs and when they are diversified across geographies. We caution policymakers on disclosures aimed at regulating public firms’ disclosure of climate risks while the disproportionate financial impact of severe weather events potentially affects private firms. JEL: D03, G14, G18, G38, K22, K32, M41, M48. Scientific community and society/Business and industry/Business Scientific community and society/Business and industry/Industry ESG climate risk economic policy capital market Full Text Additional Declarations There is NO Competing Interest. Cite Share Download PDF Status: Under Review Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-5449870","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Article","associatedPublications":[],"authors":[{"id":381301397,"identity":"ec5b9e0a-4439-480f-a1f3-ed724a0d748e","order_by":0,"name":"Lisa Liu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA2klEQVRIiWNgGAWjYDACdobEBx8qbEAMBmYGA5BQAgEtzAyPDWecSQMxiNbC+EyYt+0wVAsDEVoMDjOnMc5sOy/Pz8xjurmgwI6Bnz3HgIAWtrQHH87dNpzZzGN2e4ZBMoNkzxtCWnjSDWeU3U4AMsxu8xgAvXODoC3836R52M7BtNQz2BPWwpAmzdN2AKblMIOBBAEtkocZkoGBnAz0C1sZ0C/HeSTOPCvAq4XveAMoKu3k+dmbt90u+FMtx9+evAGvFoUDaAI8eJWDgHwDQSWjYBSMglEw4gEAoexGUJCO9ZEAAAAASUVORK5CYII=","orcid":"https://orcid.org/0000-0001-9073-4857","institution":"Columbia University","correspondingAuthor":true,"prefix":"","firstName":"Lisa","middleName":"","lastName":"Liu","suffix":""},{"id":381301398,"identity":"7ec86cff-7d50-4afc-841b-8999b1e4156e","order_by":1,"name":"Sonakshi Agrawal","email":"","orcid":"https://orcid.org/0009-0008-3513-2771","institution":"Columbia University","correspondingAuthor":false,"prefix":"","firstName":"Sonakshi","middleName":"","lastName":"Agrawal","suffix":""},{"id":381301399,"identity":"1ee2aa90-25ef-4365-8d4e-7b2a4af4572f","order_by":2,"name":"Shivaram Rajgopal","email":"","orcid":"","institution":"Columbia University","correspondingAuthor":false,"prefix":"","firstName":"Shivaram","middleName":"","lastName":"Rajgopal","suffix":""}],"badges":[],"createdAt":"2024-11-14 00:25:10","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-5449870/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-5449870/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":74397138,"identity":"32889f8a-7c55-4f48-8255-ce2316fa3946","added_by":"auto","created_at":"2025-01-22 01:57:38","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1673603,"visible":true,"origin":"","legend":"","description":"","filename":"FollowtheMoneyNov2024.pdf","url":"https://assets-eu.researchsquare.com/files/rs-5449870/v1_covered_aa5eb9d0-40d8-4d24-bb17-ac22af99a2d3.pdf"}],"financialInterests":"There is \u003cb\u003eNO\u003c/b\u003e Competing Interest.","formattedTitle":"Follow the Money: Are Severe Weather Events Value Relevant?","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"nature-portfolio","isNatureJournal":true,"hasQc":false,"allowDirectSubmit":false,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"","title":"Nature Portfolio","twitterHandle":"","acdcEnabled":false,"dfaEnabled":false,"editorialSystem":"ejp","reportingPortfolio":"","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"ESG, climate risk, economic policy, capital market","lastPublishedDoi":"10.21203/rs.3.rs-5449870/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-5449870/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eAn important contemporary policy debate relates to whether climate risk significantly impacts a firm’s financial performance. Our examination of this debate leads to three key findings. First, a severe weather event knocks off 1.3% of an affected public firm’s market capitalization. Second, specific industries and certain time periods drive statistically significant stock price reactions. Moreover, firms that disclose climate risks tend to experience slightly smaller stock price reactions. Third, private companies are particularly susceptible to the negative financial impact of natural disasters. However, private firms exhibit greater resilience when they receive financial assistance from government programs and when they are diversified across geographies. We caution policymakers on disclosures aimed at regulating public firms’ disclosure of climate risks while the disproportionate financial impact of severe weather events potentially affects private firms.\u003c/p\u003e\n\u003cp\u003eJEL: D03, G14, G18, G38, K22, K32, M41, M48.\u003c/p\u003e","manuscriptTitle":"Follow the Money: Are Severe Weather Events Value Relevant?","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-01-22 01:49:30","doi":"10.21203/rs.3.rs-5449870/v1","editorialEvents":[],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"nature-communications","isNatureJournal":true,"hasQc":false,"allowDirectSubmit":false,"externalIdentity":"NCOMMS","sideBox":"Learn more about [Nature Communications](http://www.nature.com/ncomms/)","snPcode":"","submissionUrl":"https://mts-ncomms.nature.com/","title":"Nature Communications","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"ejp","reportingPortfolio":"Nature Communications","inReviewEnabled":true,"inReviewRevisionsEnabled":false}}],"origin":"","ownerIdentity":"9c8d5f3b-c289-48af-9d46-cbbe616cb92a","owner":[],"postedDate":"January 22nd, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"under-review","subjectAreas":[{"id":40613524,"name":"Scientific community and society/Business and industry/Business"},{"id":40613525,"name":"Scientific community and society/Business and industry/Industry"}],"tags":[],"updatedAt":"2025-01-22T01:49:30+00:00","versionOfRecord":[],"versionCreatedAt":"2025-01-22 01:49:30","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-5449870","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-5449870","identity":"rs-5449870","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}