Natural disasters and investment efficiency: evidence from hurricane strikes
Journal
Asia-Pacific Journal of Accounting & Economics
Start Page
1
End Page
33
ISSN
1608-1625
2164-2257
Date Issued
2025-09-23
Author(s)
Abstract
This study examines whether natural disasters affect investment decisions for companies located in the neighborhood of a disaster zone. We find that natural disasters are associated with lower investment efficiency for companies not directly impacted by hurricanes and that the salience of investment outcomes is associated with the company's financial position. Further analyses reveal that the effect of hurricanes on distorting investment decisions is stronger when (1) the hurricane damage is more severe, (2) companies are more sensitive to climate change, and (3) companies have poor financial reporting quality.
Subjects
financial constraints
Investment efficiency
natural disaster
risk perceptions
salience bias
Publisher
Informa UK Limited
Type
journal article