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Kelly Ha
Warning Signs: Climate Change Discourse and Subsequent Asset
The Effect of Institutional Distance on Cross- Border M&A Performance: The Role of ‘Play of the Game’ Experience FALL25-08, November 2025 Rajaram Veliyath
Write-downs FALL25-01, November 2025
Climate change creates corporate challenges in the form of physical risks (e.g., acute weather events) and transition risks (e.g., an evolving market towards decarbonization). These risks can directly influence the long-term viability of the firm’s current operations. Conference call discussions about climate change may offer investors insight into future financial outcomes, yet the predictive content of such narratives for asset impairments is not well established. Consequently, we present evidence of a positive relation between climate change exposure
measured using conference call narrative and future write- downs. Firms exposed to climate change risks are more likely to record asset write-downs in its future income statement. Further, we find that the sentiment of this narrative is negatively associated with future write-downs, suggesting that managers use the tone of climate change narrative to offer context on the firm’s ability to respond to climate risks. Our research suggests that stakeholders seeking to project future financial performance should not overlook climate change discussion.
Using neo-institutional theory and learning theory precepts, this paper examined the impact of an acquiring firm’s prior experience in level 3 and level 4 institutional environments on the successful implementation of cross-border M&A and consequent performance. The greater is the institutional distance between the acquiror’s home country and the acquired firm’s host country, the lesser are the prospects for successful M&A integration. However, findings in prior research pertain to levels 1 and 2 institutional environments,
which are measured and aggregated nationally and centrally. In contrast, the absorption of acquired sub- units and consequent successful M&A integration occurs mostly at regional and local levels. At these local levels (frequently separated by geographic distances from national capitals), there are huge variations in levels 3 & 4 institutional conditions. These variations pose challenges for acquiring firms (independent of level 1 and level 2 environmental differences between national entities). We found that acquiring firms
with prior acquisition experiences in different level 3 and level 4 environments had a better chance of successfully implementing cross- border acquisitions. Our study of 388 completed cross-border M&A deals (that occurred between 1996 and 2015) found that the acquiror’s prior acquisition experience in different level 3 and level 4 environments not only improved post-acquisition performance, but also mitigated the potential adverse effects of institutional distance, through moderating that relationship.
Climate change discussion in earnings calls predicts future asset write-downs. High climate exposure firms face greater risk of asset write-downs. Positive (negative) tone of climate discussions signals lower (higher) future write-downs. Conference calls reveal risks missed in formal ESG reports. Investors can use earnings call narratives to forecast financial impacts.
Prior to undertaking acquisitions, the acquiror’s managers are strongly advised to undertake comprehensive reviews of their firm’s prior experience in successfully completing acquisitions in countries that are institutionally distant from, as well as are more diverse than their home country institutional environment. The more diverse the range of institutional environments that have been encountered during the past M&A initiatives undertaken by the firm, the greater is the organizational learning and capabilities that have been engendered. Both these heighten the prospects for M&A success. Acquiring managers need to be cognizant of the scope and extent of the geographic spread of the acquisition targets’ facilities/units across the host country. The greater the scope and spatial dispersion across these organizational sub- units, the more challenging the acquisition is going to be for the acquiring firm to integrate. This is particularly true when undertaking international acquisitions in other large continental-sized countries. Where there are significant knowledge or capability gaps, the acquiror’s management needs to consider how and when to redress these capability shortcomings. This is especially true of acquisitions being considered/undertaken in institutionally different and varied country contexts. Where significant gaps in organizational knowledge and capabilities are uncovered, it may be prudent to delay (or not undertake) such acquisitions in the short-term, until the knowledge and capability deficiencies have been remedied.
Asymmetric Underreactions and House Price Revisions SPRING26-05, March 2026 Jing Ding, Rongbing Huang, Lei Jiang, Franklin Qian
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At the neighborhood level, months with larger average listprice cuts forecast lower housing returns in subsequent months. A search-and-bargaining model with asymmetric underreaction explains these patterns: sellers adjust their reservation prices less than buyers when negative information arrives but respond comparably when information is positive. This behavioral asymmetry generates momentum in list price cuts but not in price increases and highlights how loss-averse seller behavior shapes microlevel pricing dynamics. Listprice cuts predict further price declines; increases show no momentum. Sellers react more slowly than buyers to positive policy changes. Below-budget buyer visits signal future sale price reductions. Neighborhoods with larger list price cuts see weaker near-term returns.
This study documents a systematic asymmetry in how housing market participants respond to information that arrives during the listing period. Using detailed U.S. listing histories linked to high-frequency monetary policy shocks and a large Chinese dataset with buyer budget disclosures and down payment policy changes, we show that listprice cuts exhibit strong momentum, whereas listprice increases do not. Larger reductions from the initial to the final list price reliably predict larger declines from the final list price to the sales price. Instrumental variable estimates using monetary policy surprises confirm that this momentum reflects negative information shocks rather than endogenous seller behavior. Furthermore, sellers are less responsive than buyers to an adverse downpayment policy shock but react similarly to a positive shock. Chinese buyer-visit data show that a higher share of visitors with budgets below the list price predicts larger final list-to-sales price declines, while above-budget visitors do not predict increases.
Coles Research Magazine | Working Paper Series
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