Extreme temperature changes and firm ESG performance

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ABSTRACT There is limited focus on the impact of temperature changes on firm ESG performance. This study aims to expand the research perspective of existing literature by examining A-share listed firms on the Shanghai and Shenzhen stock exchanges from 2009 to 2020. It conducts a detailed analysis of the extent and mechanisms through which extreme temperature changes affect firm ESG performance. The result demonstrates that extreme low temperatures have a negligible impact on firm ESG performance, whereas extreme high temperatures substantially hinder firm ESG performance. Mechanism checks indicate that extreme high temperatures significantly impact firm ESG performance by decelerating digital transformation, hindering technological innovation, diminishing internal control quality, and increasing financing constraints. Moreover, for firms situated in regions with stringent environmental regulations, low-emission firms, non-state-owned firms, along with firms exhibiting a strong willingness for risk tolerance, the damaging effect of extreme high temperatures on firm ESG performance represents more significant.

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  • Research Article
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Estimating Extremes in Transient Climate Change Simulations
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