Managerial perspectives on climate change and stock price crash risk

Finance Research Letters, Volume 51, January 2023, 103411

HailJungaChang-KeunSongab

a Graduate School of Carbon Neutrality, Ulsan National Institute of Science and Technology, Ulsan, South Korea
b Department of Urban and Environmental Engineering, Ulsan National Institute of Science and Technology, Ulsan, South Korea

Received 16 August 2022, Revised 2 October 2022, Accepted 10 October 2022, Available online 14 October 2022, Version of Record 23 October 2022.

ABSTRACT

In this study, we examine the effects of manager’s perspectives on climate change on stock price crash risk. The analysis confirms that manager’s climate change perspective is negatively associated with future stock price crash risk likelihood. Various channel tests show that investor attention and analyst coverage are potential channels through which a firm’s climate change perspective improves financial stability and ultimately reduces crash risk. Our results are also robust to alternative climate change perspective measures.