We investigate the impact of escalating temperature and heavy rainfall on the default probability of small and micro firms (SMiEs) in six European countries from 2005 to 2014. Our findings reveal that a one standard deviation increase (2.56°C) in the yearly mean temperature amplifies a firm’s...

We study how investors price voluntary climate adaptation disclosure by using natural disasters as exogenous shocks to information uncertainty about firms’ fundamentals. We show that affected firms that mention adapting to climate risks suffer a 2.2% decrease in market-adjusted returns, akin...