Investments under Risk: Evidence from Hurricane Strikes
June 2025
Working Paper Number:
CES-25-43
Abstract
We demonstrate that firms with plants in areas subject to a significant hurricane strike reduce their capital expenditures at the hurricane-affected plants and shift capital expenditures to plants in non-hurricane-affected areas. This effect is not present prior to 1997 and only appears from 1997 on. Our evidence is consistent with the possibility that a significant climate event such as the signing of the Kyoto Protocol raised the salience of the perceived risk from actual hurricane strikes and shifted firm behavior.
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investment,
report,
company,
disclosure,
investing,
impact,
risk,
disaster,
hurricane,
katrina
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Census of Manufactures,
Annual Survey of Manufactures,
Longitudinal Business Database,
Census of Manufacturing Firms,
North American Industry Classification System,
Census Bureau Disclosure Review Board,
Federal Statistical Research Data Center
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