Climate change exposure and firm value: Evidence from low and middle income economies

This study examines the impact of climate change exposure on firm value for low- and middleincome economies by utilizing cross-country firm-level dataset. This study employs two novel firm-level climate change exposure variables to explore the impact of climate change exposure on firm value in both financial and physical dimensions of it. The results show that climate change exposure significantly affects firm value through both transition and physical risk channels. At the same time, ESG performance of the firms does mitigate the effect of climate change exposure on the firm value, while corporate social responsibility performance based executive compensation does not mitigate the impact of climate change exposure on firm value. The findings are robust to different modeling and variable alternatives. This study is expected to sheds new light on the climate change exposure-firm value relationship, especially on the low and middle income economies.