Celebrating Success – Dr Zhonghao Jiang
Congratulations to Dr Zhonghao Jiang and their co authors, Yukun Shi from University of Glasgow and Lu Xing from University of Bath, whose paper entitled Climate Change Exposure and Mutual Fund Ownership has been accepted for publication the British Accounting Review.
Highlights:
The paper investigates how mutual funds react to firms’ climate change exposure. It finds that:
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Firms’ climate change exposure is negatively associated with changes in U.S. mutual fund ownership
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The effect is driven by climate-related opportunities and regulatory risks, rather than physical risks
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The pattern reflects mutual funds’ concerns about transition risk and stock-performance pressures
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Similar results are observed among non-U.S. mutual funds in countries with strong environmental norms
Abstract:
Using a sample of U.S. firms and a text-based measure of managerial and analyst attention to climate change issues during earnings calls, we document a negative association between firms’ climate change exposure and changes in U.S. mutual fund ownership, suggesting U.S. mutual funds’ cautious investment approach to climate change. We further provide causal evidence for this relation using the staggered adoptions of state-level climate change adaptation plans and renewable portfolio standards. Additional analyses show that our finding is driven by climate-related opportunities and regulatory risks, rather than physical risks. Changes in U.S. mutual fund ownership reflect concerns over firms’ transition risks and stock performance pressures. Extending the analysis to non-U.S. mutual funds, we find similar results among funds domiciled in countries with strong environmental norms.