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Climate change exposure and the takeover market: A text‐based analysis

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  • Pongsapak Chindasombatcharoen
  • Pattanaporn Chatjuthamard
  • Pornsit Jiraporn
  • Nopparat Wongsinhirun

Abstract

We examine the impact of takeover vulnerability on firm‐specific climate change exposure using sophisticated text‐based metrics generated from machine learning algorithms and a measure of takeover vulnerability primarily derived from state takeover laws. Based on a large sample of more than 28,000 observations, our findings show that firms more vulnerable to hostile takeovers have higher exposure to physical climate risks, as managers focus on short‐term financial performance over long‐term risk mitigation. These firms also reduce regulatory risk exposure by adopting stringent compliance measures and improving environmental practices to avoid penalties and attract investors. However, they are less likely to invest in new business opportunities related to climate change, prioritizing stability over potential gains in new business opportunities. Propensity score matching and entropy balancing confirm the robustness of these results. Our research provides insights into how hostile takeover threats influence corporate environmental strategies.

Suggested Citation

  • Pongsapak Chindasombatcharoen & Pattanaporn Chatjuthamard & Pornsit Jiraporn & Nopparat Wongsinhirun, 2024. "Climate change exposure and the takeover market: A text‐based analysis," Business Strategy and the Environment, Wiley Blackwell, vol. 33(8), pages 8587-8592, December.
    • Handle: RePEc:bla:bstrat:v:33:y:2024:i:8:p:8587-8592
    DOI: 10.1002/bse.3935
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    References listed on IDEAS

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    1. Chatjuthamard, Pattanaporn & Jiraporn, Pornsit & Lee, Sang Mook & Sarajoti, Pattarake, 2024. "Customer concentration, managerial risk aversion, and hostile takeover threats," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 268-279.
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