IDEAS home Printed from https://ideas.repec.org/a/bla/acctfi/v66y2026i1p621-656.html

Every Cloud Has a Silver Lining: Climate Risk and Stock Price Informativeness

Author

Listed:
  • Yubao Fan
  • Mengmeng Guo
  • Hao Zheng

Abstract

This study investigates how climate risks, exemplified by extreme rainfall, influence stock price informativeness by catalysing firms' adaptive strategies and capital market responses. Using data from Chinese A‐share listed companies between 2009 and 2019, we find that extreme rainfall significantly enhances stock price information efficiency, and this result remains robust after addressing a series of endogeneity concerns. This effect is attributable to both heightened information demand and enhanced information supply. Specifically, the increased information demand from institutional investors, particularly those with a short‐term focus, combined with greater analyst coverage, strengthens corporate governance and improves information efficiency. Meanwhile, firms with greater exposure to extreme rainfall respond by adopting strategic adjustments, including increased transparency and more comprehensive climate risk disclosures. Further evidence suggests that favourable institutional environments enable credible disclosure, whereas elevated financial and operational risks strengthen firms' incentives to enhance transparency. Our study highlights that climate risks shape market information efficiency through firm adaptation and investor responses.

Suggested Citation

  • Yubao Fan & Mengmeng Guo & Hao Zheng, 2026. "Every Cloud Has a Silver Lining: Climate Risk and Stock Price Informativeness," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(1), pages 621-656, March.
    • Handle: RePEc:bla:acctfi:v:66:y:2026:i:1:p:621-656
    DOI: 10.1111/acfi.70114
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/acfi.70114
    Download Restriction: no
    File URL: https://libkey.io/10.1111/acfi.70114?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:acctfi:v:66:y:2026:i:1:p:621-656. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaanzea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.