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Climate change and corporate culture of innovation: evidence from earnings conference calls

Climate change and corporate culture of innovation: evidence from earnings conference calls Exploiting novel measures of climate change exposure and corporate culture generated by a powerful textual analysis of earnings conference calls, this study aims to explore the effect of firm-specific climate change exposure on corporate innovation through the lens of corporate culture.Design/methodology/approachThe authors apply the standard regression analysis as well as a variety of sophisticated techniques, namely, propensity score matching, entropy balancing and an instrumental-variable analysis with multiple alternative instruments.FindingsThe authors find that more exposure to climate change risk results in more innovation, as indicated by a significantly stronger culture of innovation. The findings are consistent with the notion that firms more exposed to climate change risk are pressed to be more innovative to adapt to the numerous changes caused by climate change. Finally, the authors also find that the effect of firm-level exposure on innovation is considerably less pronounced during uncertain times.Originality/valueThe authors are among the first studies to take advantage of a novel measure of firm-specific exposure to climate change and investigate how climate change exposure influences an innovative culture. Since climate change is a timely issue, the findings offer important implication to several stakeholders, such as shareholders, executives and investors in general. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Pacific Accounting Review Emerald Publishing

Climate change and corporate culture of innovation: evidence from earnings conference calls

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References (83)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0114-0582
eISSN
0114-0582
DOI
10.1108/par-03-2023-0041
Publisher site
See Article on Publisher Site

Abstract

Exploiting novel measures of climate change exposure and corporate culture generated by a powerful textual analysis of earnings conference calls, this study aims to explore the effect of firm-specific climate change exposure on corporate innovation through the lens of corporate culture.Design/methodology/approachThe authors apply the standard regression analysis as well as a variety of sophisticated techniques, namely, propensity score matching, entropy balancing and an instrumental-variable analysis with multiple alternative instruments.FindingsThe authors find that more exposure to climate change risk results in more innovation, as indicated by a significantly stronger culture of innovation. The findings are consistent with the notion that firms more exposed to climate change risk are pressed to be more innovative to adapt to the numerous changes caused by climate change. Finally, the authors also find that the effect of firm-level exposure on innovation is considerably less pronounced during uncertain times.Originality/valueThe authors are among the first studies to take advantage of a novel measure of firm-specific exposure to climate change and investigate how climate change exposure influences an innovative culture. Since climate change is a timely issue, the findings offer important implication to several stakeholders, such as shareholders, executives and investors in general.

Journal

Pacific Accounting Review – Emerald Publishing

Published: Apr 29, 2024

Keywords: Climate change; Innovation; Corporate culture; Textual analysis; Machine learning; G30; O31; Q54; Q55

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