What the study found
The study found that greater exposure to natural disasters is linked to lower firm value in China. This effect is especially strong for firms with high environmental, social, and governance (ESG) ratings.
Why the authors say this matters
The authors conclude that the findings suggest ESG commitments can be associated with higher operational costs and lower profitability during crises in developing economies. They also suggest that overinvestment in ESG initiatives may reduce corporate flexibility and strain financial resources.
What the researchers tested
The researchers examined the impact of natural disasters on corporate valuation in China, with attention to ESG performance. They compared firms with different ESG ratings and also looked at whether the pattern differed for non-state-owned enterprises, less environment-sensitive firms, and firms with higher operational risk or lower resilience.
What worked and what didn't
Heightened natural-disaster exposure was associated with significantly lower firm value. The negative effect was larger for firms with high ESG ratings, and it was also more pronounced for non-state-owned enterprises, less environment-sensitive firms, and companies with elevated operational risks or lower resilience.
What to keep in mind
The abstract does not describe the specific data sources, study period, or statistical methods. It also limits the findings to China, so the summary provided here does not establish whether the same pattern applies in other settings.
Key points
- Natural-disaster exposure was associated with lower firm value in China.
- The effect was stronger for firms with high ESG ratings.
- The authors link strong ESG commitments to higher operating costs and lower profitability during crises.
- The negative association was more pronounced for non-state-owned enterprises.
- The pattern was also stronger for firms with higher operational risk or lower resilience.
Disclosure
- Research title:
- Natural disasters reduce firm value, especially for high-ESG firms
- Authors:
- Dong Lu, Hao Wu, Cunyu Xing, Jin Xu, Ge Zhang
- Institutions:
- Liaoning University, Southwestern University of Finance and Economics, Southwestern University of Finance and Economics, Southwestern University of Finance and Economics, William Paterson University
- Publication date:
- 2026-03-05
- OpenAlex record:
- View
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