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Abstract Using China’s meteorological data and A-share listed company data from 2007 to 2021, this study examines how extreme climate risks influence the spatial distribution of corporate investment. The findings show that extreme climate risks significantly prompt companies to invest in regions with lower climate risks, with profit-seeking motives and risk-avoidance motives playing key roles in this process. Heterogeneity analysis reveals that this effect is primarily observed in geographically non-dependent firms and private enterprises. The analysis of different types of extreme climate events shows that extreme temperatures, both high and low, have a more significant impact on corporate investment decisions in low climate risk regions, whereas extreme precipitation does not show a notable effect. Further research indicates that investing in low climate risk regions not only significantly enhances financial performance and corporate value but also effectively reduces corporate risk.
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Received: 18 January 2024
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