| dc.description.abstract | In recent years, the frequency of extreme climate events has increased, and climate change has aggravated the deterioration of ecosystems. Firms pay more attention to environmental protection, social responsibility and corporate governance (ESG). This study examines the impact of climate exposure on the readability of financial statements from 2001 to 2020. Firm-level climate exposure data published by Sautner, Van Lent, Vilkov and Zhang (2020) and Bog Index data published by Brian Miller′s personal website are used. The Least Squares Method (OLS) is used to analyze the study. The major finding is firms with higher climate risk exposure is associated with lower readability of financial statements. In addition, companies with higher climate risk and less readability of financial statements do not make their stock more volatile, but they do make analysts′ earnings forecasts more likely to be wrong. The company can be effectively monitored under the supervision of Bank Debt, and the company will pay more attention to the risk of climate change, thus improving the readability of financial statements. Companies with higher climate exposure and less readable financial statements, under the oversight of the internal audit committee, tend to make analysts′ earnings forecasts more accurate. Referring to Ginglinger and Moreau (2019), we employ the 2015 Paris agreement as an exogenous event in this paper. The results show that 2015 Paris agreement serves as a market monitoring tool, enabling companies to make overall financial statements more readable. Thus, the accuracy of analysts′ earnings forecast becomes higher. | en_US |