Plenary Session
Session Chair: Federico Nardari, University of Melbourne
Do firms mitigate climate impact on employment? Evidence from US heat shocks
Viral Acharya; New York University, CEPR, and NBER
Abhishek Bhardwaj; Tulane University
Tuomas Tomunen; Boston College Carroll School of Management
How do firms mitigate the impact of rising temperatures on employment? Using establishment-level data, we show that firms operating in multiple counties in the United States respond to heat shocks by reducing employment in the affected locations and increasing it in unaffected locations, whereas single-location firms simply downsize. Workforce reallocation, aimed at preventing heat-related decline in labor productivity, is stronger among larger, financially stable firms with ESG-oriented investors. The scale of this response increases with the severity of climate disasters and is aided by credit availability and competitive labor markets. Climate risk management by firms mitigates the impact of heat shocks on aggregate employment but affects the spatial distribution of economic activity.
Discussant: Yi Fan, National University of Singapore
Irreplaceable Venture Capitalists
Michael Ewens; Columbia University
Denis Sosyura; Arizona State University
We provide evidence on how individual venture capitalists (VCs) add value to startups, using exogenous deaths of VC directors on startup boards. Losing a VC director increases the probability of startup failure, delays a successful exit, and reduces the IPO likelihood. Affected startups that raise capital after a director loss obtain a narrower investor base. These effects persist after the replacement of deceased VCs, indicating the importance of the original deal experts for startup survival, financing, and going public. In contrast, losing a VC director does not affect recruitment, product development, and CEO replacement, suggesting that these skills are replicable. Overall, a VC’s network and reputation are key irreplaceable assets.
Discussant: Adam Winegar, BI Norwegian Business School
Consumers' Reactions to Corporate ESG Performance: Evidence from Store Visits
Tinghua Duan; IESEG School of Management
Frank Weikai Li; Singapore Management University
Roni Michaely; University of Hong Kong
Using micro-level data on consumer shopping behavior, this paper investigates end-consumers’ attitudes toward firms’ ESG behavior, and as importantly, the ability of consumers to affect firms’ policy concerning sustainability issues. We find that consumers care about firms’ approach toward ESG, and consumers’ behavior can impact firms’ attitudes. Using ESG incidents as a proxy, we find that the reduction in store visits is more pronounced for ESG-conscious consumers, such as those living in democratic counties, and counties with a higher fraction of educated and younger residents. Online shopping interest data yields similar results. Using abnormally hot temperature as a shock to residents’ awareness of sustainability issues, we show the effect is plausibly causal.
Discussant: Vidhan Goyal, Hong Kong University of Science and Technology