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Raising Equity in a Risky Climate: The Impact of Physical Hazards on SEO Reactions

Þorkelsson, Bjarnleifur Þór LU and Alinikula, Oliver LU (2025) BUSN79 20251
Department of Business Administration
Abstract
The purpose of this paper is to study the relationship between Seasoned Equity Offerings and Physical Climate Risk in the United States. This thesis conducts an events study using the market model and conducts a multivariate regression analysis to study the relationship between the announcement effects and physical climate risk. The theoretical perspectives for this thesis costs of the market timing theory, efficient market hypothesis (EMH), pecking order theory and information asymmetry. Our thesis finds that physical climate exposure and sensitivity are
negatively associated with the announcement effects of SEOs in the U.S. Among the climate risk variables, only flooding shows a statistically significant impact. Additionally, we find... (More)
The purpose of this paper is to study the relationship between Seasoned Equity Offerings and Physical Climate Risk in the United States. This thesis conducts an events study using the market model and conducts a multivariate regression analysis to study the relationship between the announcement effects and physical climate risk. The theoretical perspectives for this thesis costs of the market timing theory, efficient market hypothesis (EMH), pecking order theory and information asymmetry. Our thesis finds that physical climate exposure and sensitivity are
negatively associated with the announcement effects of SEOs in the U.S. Among the climate risk variables, only flooding shows a statistically significant impact. Additionally, we find that private placements experience a less negative market reaction to SEO announcements
compared to public offerings.
The results suggest that managers and investors should incorporate physical climate risks into their equity financing decisions. These findings highlight the importance of not only emphasizing ESG and CSR initiatives, but also addressing the tangible risks posed by climate change to firms. (Less)
Please use this url to cite or link to this publication:
author
Þorkelsson, Bjarnleifur Þór LU and Alinikula, Oliver LU
supervisor
organization
course
BUSN79 20251
year
type
H1 - Master's Degree (One Year)
subject
keywords
SEO, Physical Climate Risk, Agency Theory, ESG, Hazards.
language
English
id
9194035
date added to LUP
2025-06-26 15:03:59
date last changed
2025-06-26 15:03:59
@misc{9194035,
  abstract     = {{The purpose of this paper is to study the relationship between Seasoned Equity Offerings and Physical Climate Risk in the United States. This thesis conducts an events study using the market model and conducts a multivariate regression analysis to study the relationship between the announcement effects and physical climate risk. The theoretical perspectives for this thesis costs of the market timing theory, efficient market hypothesis (EMH), pecking order theory and information asymmetry. Our thesis finds that physical climate exposure and sensitivity are
negatively associated with the announcement effects of SEOs in the U.S. Among the climate risk variables, only flooding shows a statistically significant impact. Additionally, we find that private placements experience a less negative market reaction to SEO announcements
compared to public offerings.
The results suggest that managers and investors should incorporate physical climate risks into their equity financing decisions. These findings highlight the importance of not only emphasizing ESG and CSR initiatives, but also addressing the tangible risks posed by climate change to firms.}},
  author       = {{Þorkelsson, Bjarnleifur Þór and Alinikula, Oliver}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Raising Equity in a Risky Climate: The Impact of Physical Hazards on SEO Reactions}},
  year         = {{2025}},
}