Volatile Temperatures and Their Effects on Equity Returns and Firm Performance

Join our climaTRACES Lab workshop

Speaker: Atreya Dey, Cambridge Judge Business School, University of Cambridge

We construct a measure of abnormal temperature variability, defined as deviations in intra-month temperature anomalies from a rolling historical baseline, to study its effects on firms and asset prices. Firms with higher exposure to variability experience lower revenues and hours worked, driven by reductions in household spending and labor supply. A strategy based on cross-sectional variation in abnormal temperature variability yields a realised market-adjusted alpha of 4.9% annually. Disagreement over the materiality of climate risks and uncertainty in pricing these effects both increase volatility and slow the incorporation of temperature exposure into prices. 

A light lunch will be provided but bring along your drink of choice.

The weekly climaTRACES workshops, organised by Kamiar Mohaddes and Henning Zschietzschmann, are attended by a diverse group of people from economics, geography, politics, engineering, business, earth sciences, natural sciences and history, generating interdisciplinary discussion. 

No registration required

No registration required. If you have any questions about this seminar, please email Henning Zschietzshmann.

Please note, this workshop is an in-person event but in case you are not able to attend, you can also join the workshop virtually on Zoom.