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Extreme weather events and the impact on stakeholders
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Yu, Qiaoye (2023) Extreme weather events and the impact on stakeholders. PhD thesis, University of Warwick.
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Official URL: http://webcat.warwick.ac.uk/record=b3985263
Abstract
This thesis consists of three papers on the impact of extreme weather events on stakeholers. Chapter two investigates whether retail investors are more likely to invest in “green” companies after extreme weather events happened. Theoretical literature proposes that green stocks outperform brown stocks when concerns about climate change are unexpectedly strengthened. Retail investors, who are generally less sophisticated than institutional investors, are more likely to pay attention to prominent events, and may place greater importance on ESG information. Using extreme weather events as an exogenous shock to climate change concerns, this study finds that retail investors are more likely to net buy shares in green firms after an event. This study also finds that green firms have better cash flow prospects after extreme weather events. These findings suggest that extreme weather events make ESG-related risks more salient for retail investors and that firms with high ESG disclosure scores are better able to withstand such events.
Chapter three examines whether and how extreme weather events impact audit quality. Psychology research indicates that people with negative emotions change their sensitivity to risks, and auditors with negative emotions influence their professional skepticism. Using extreme weather events (referred to as poor weather conditions in this study) as an exogenous shock that causes auditors to experience more negative emotions, this study shows that accounting misstatements (following years’ restatement) are less likely to occur for audit firms when they are exposed to poor weather conditions and their clients do not experience poor weather events in that period, which indicates a higher audit quality. Further evidence from considering the same audit partner before and after poor weather conditions strengthens the results by excluding the impact of audit rotation. Overall, the findings are consistent with the notion that auditors with negative emotions increase the probability of a misstatement being detected.
Chapter four investigates the concept of ESG decoupling within the context of environmental crises represented by extreme weather events. Utilizing a difference-indifferences model, I examine the impact of ESG decoupling over time between firms proximate to extreme weather events (affected firms) and those not affected (non-affected firms), further stratifying decoupling by green action and greenwashing. The results reveal that post-crisis, affected firms significantly increase their green actions (increase under-decoupling) compared to their non-affected counterparts. The results suggest that environmental crises lead firms to take more green actions for firms near the disaster area. This study contributes to the understanding of corporate behavior in the face of environmental crises and the role of decoupling in this dynamic.
Item Type: | Thesis (PhD) | ||||
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Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HG Finance |
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Library of Congress Subject Headings (LCSH): | Weather -- Economic aspects, Climatic changes -- Economic aspects, Environmental economics, Individual investors -- Attitudes, Consumer behavior, Economics -- Psychological aspects | ||||
Official Date: | September 2023 | ||||
Dates: |
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Institution: | University of Warwick | ||||
Theses Department: | Warwick Business School | ||||
Thesis Type: | PhD | ||||
Publication Status: | Unpublished | ||||
Supervisor(s)/Advisor: | Horton, Joanne ; Zhang, Zhifang ; Antoniou, Constantinos | ||||
Format of File: | |||||
Extent: | xii, 151 pages : illustrations, maps | ||||
Language: | eng |
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