FINANCE


JAWAD ADDOUM ASSOCIATE PROFESSOR Charles H. Dyson School


of Applied Economics and Management Cornell SC Johnson College of Business Cornell University


Temperature Shocks and Industry Earnings News Journal of Financial Economics 150, 1, October 2023 LINK TO PAPER LINK TO ADDOUM VIDEO


Co-authors • Jawad Addoum Associate Professor, Charles H. Dyson School of Applied


Research and Management, Cornell SC Johnson College of Business, Cornell University


• David T. Ng Professor, Charles H. Dyson School of Applied Economics and • Ariel Ortiz-Bobea


Management, Cornell SC Johnson College of Business, Cornell University Associate Professor, Charles H. Dyson School of Applied


Research and Management, Cornell SC Johnson College of Business, Cornell University


Summary


DAVID NG PROFESSOR


Charles H. Dyson School


of Applied Economics and Management Cornell SC Johnson College of Business Cornell University


Climate scientists project an increase in both the mean and volatility of global temperatures, suggesting that exposure to extreme weather events is a virtual certainty. Accordingly, the topic of climate change has attracted the attention of economists interested in assessing its potential effects. Addoum, Ng, and Ortiz-Bobea have recently examined the impact of exposure to extreme temperatures at economic establishments in the United States. In this paper, they study how extreme temperatures affect corporate profitability across different industries and whether sell-side analysts understand these relationships.


ARIEL ORTIZ-BOBEA ASSOCIATE PROFESSOR Charles H. Dyson School


of Applied Economics and Management Cornell SC Johnson College of Business Cornell University


TO IMPACT CONTENTS


RESEARCH WITH IMPACT: CORNELL SC JOHNSON COLLEGE OF BUSINESS • 2023 EDITION 28


Using a large sample yielding precise estimates, they combine granular daily data on temperatures across the continental U.S. with locations of public companies’ establishments and build a panel of quarterly firm-level tempera- ture exposures. While extreme temperatures significantly impact earnings in over 40% of industries, with bi-directional effects that harm some industries while others benefit, the authors find no evidence that temperature exposures significantly affect establishment-level sales or productivity. However, some sectors of the economy may still exhibit sensitivity to extreme temperatures, which may be pronounced only during certain months or seasons.


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