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Climate News and Asset Valuations: Insights from Latin America
Author:
Muhsin Ciftci
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Christina Kolerus
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Series:
IMF Working Papers
Volume/Issue:
Volume 2025: Issue 037
Language:
English
Publication Date:
07 Feb 2025
DOI:
https://doi.org/10.5089/9798229000932.001
ISBN:
9798229000932
ISSN:
1018-5941
Pages:
66
Keywords:
Climate Change; Climate Risk Premium; Financial Asset Pricing; Textual Analysis; climate news; climate policy news; climate opportunity; University Frankfurt IMF; Return on investment; Greenhouse gas emissions; Climate policy; Caribbean; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We study the impact of climate-related news on asset prices in eight Latin American countries. We use both newspapers and official announcements to construct daily, country-specific indices via textual analysis, reflecting media coverage of transition risks, climate opportunities, regulatory actions, and physical risks. Leveraging an unbalanced daily panel data set of 628 firms from 2000 to 2023, we find a significant and robust climate risk premium in Latin America, which is higher for "browner" firms and has increased in more recent years. Focusing on major climate policies announced in official gazettes after the legislative process has been completed, we show that the publication of the laws is associated with a protracted decline in the relative stock prices of high-emission firms.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund